Citi targets 2026 launch for crypto custody service as Wall Street dives deeper into digital assets

Citi is gearing up to introduce a crypto custody service by 2026, as revealed by an executive during a CNBC interview. Biswarup Chatterjee, the global head of partnerships and innovation in Citi's services division, noted that the bank has been developing this service for the past two to three years and is making significant strides. "We are exploring various avenues and aim to present a credible custody solution for asset managers and other clients in the upcoming quarters," Chatterjee stated. Traditionally, major financial institutions have been hesitant to engage with cryptocurrencies such as Bitcoin and Ether. However, the regulatory landscape has shifted, particularly under the Trump administration, paving the way for laws like the GENIUS Act to provide a more favorable environment for digital assets, thus encouraging banks to venture into this space. Custody in the crypto realm can take various forms, from exchanges holding digital currencies to institutions managing self-custody. This service allows banks to safeguard a range of assets on behalf of their clients, including shares in companies. Chatterjee emphasized that Citi's forthcoming custody service would involve the bank holding cryptocurrencies directly, recognizing the potential risks associated with custody, including cyber threats that could lead to asset theft. To mitigate these risks, Chatterjee explained that Citi is considering both developing an in-house technology solution and forming partnerships with external companies. "We may create tailored solutions designed in-house for specific assets, while also exploring nimble third-party options for other asset types," he elaborated. Despite the growing interest in crypto custody, not all Wall Street banks share the same enthusiasm. JPMorgan's CEO Jamie Dimon has expressed skepticism, indicating that while the bank will facilitate cryptocurrency purchases for clients, it will not offer custody services. This year has seen U.S. banks roll out various initiatives related to cryptocurrencies, often integrating blockchain technology. For instance, JPMorgan is developing a deposit token intended to serve as a digital equivalent of traditional bank deposits, enabling around-the-clock transactions. Citi has introduced its own version, Citi Token Services, to facilitate rapid cross-border money transfers. Looking ahead, banks are also eyeing the potential of stablecoins, which are typically pegged to fiat currencies like the U.S. dollar and supported by real-world assets to stabilize their value. With major players like Circle’s USDC and Tether’s USDT leading the stablecoin market, Chatterjee noted that these digital currencies could be beneficial in regions with underdeveloped banking infrastructures. As Citi's clientele expands into such areas, a stablecoin product might become increasingly viable. Chatterjee acknowledged that Citi is still in the early stages of exploring stablecoins. Recently, the bank invested in stablecoin infrastructure firm BVNK, signaling its commitment to this emerging sector. Other major banks are also evaluating stablecoins, with Bank of America’s CEO Brian Moynihan confirming plans to launch a stablecoin, while JPMorgan is also actively exploring digital currency options. "There’s a significant opportunity for us to provide diverse cash services and respond to client interest in stablecoins," said Scott Lucas, JPMorgan’s global head of markets for digital assets. As regulations continue to evolve, the landscape for digital assets appears to be transforming, presenting new opportunities for traditional financial institutions.