Citigroup is considering providing stablecoin custody and other services in response to policy changes in Washington that are encouraging financial firms to enter the cryptocurrency business. The law requires stablecoin issuers to hold safe assets like U.S. Treasuries, creating opportunities for traditional banks like Citi to provide custody services. A McKinsey study estimates $250 billion in stablecoins have been issued, mainly for settling cryptocurrency trades.

Citi is also exploring custody services for digital assets backing crypto-related investment products, such as ETFs tracking the spot price of bitcoin. The largest bitcoin ETF, BlackRock’s iShares Bitcoin Trust, has a market capitalization of around $90 billion. Currently, Coinbase dominates the business as the custodian for over 80% of crypto ETF issuers.

Additionally, Citi is looking into using stablecoins to expedite payments, which typically take days in the traditional banking system. The bank currently offers tokenized U.S. dollar payments using a blockchain network to transfer dollars between accounts in major financial hubs 24/7. Services are being developed to allow clients to send stablecoins between accounts or convert them to dollars for instant payments.

Under the current U.S. administration, regulators are more open to traditional financial firms expanding into the crypto sector. However, firms like Citi must comply with regulations on money laundering and currency controls for international transfers. Custody of crypto assets must ensure legitimacy, with a focus on cyber and operational security for safekeeping and theft prevention. Citi is also considering issuing its own stablecoin.

Read more at Yahoo Finance: Citigroup considers custody and payment services for stablecoins, crypto ETFs