As U.S. lawmakers inch closer to passing stablecoin legislation, Citigroup is reportedly exploring the possibility of issuing its own stablecoin.
In a post-earnings call, Jane Fraser, CEO of Citigroup, said the institution is also evaluating key aspects of digital assets, including stablecoin reserve management, fiat and digital currency on- and off-ramps, and crypto custodial services.
This growing interest in digital asset technologies reflects a larger trend in the U.S. financial services industry. JPMorgan Chase and Bank of America have both signaled plans to deepen their involvement with stablecoins, with JPMorgan pursuing several initiatives through its Kinexys digital assets division.
Stablecoins have dominated the limelight in recent months, with industry leaders like Walmart, Amazon, and Meta openly considering launching their own stablecoins. However, fiat-backed tokens are more than just a passing fad—they have the potential to revolutionize finance, particularly in areas like cross-border payments.
Lost in the Hoopla
Amid the stablecoin hype, the broader integration of digital asset technologies into mainstream finance often gets overlooked. Blockchain—the underlying technology behind digital assets, including stablecoins—has applications that go well beyond cryptocurrency.
With its secure, transparent framework, blockchain offers an ideal foundation for artificial intelligence. AI has struggled with inefficiencies, often due to reliance on incomplete data repositories and a lack of transparency around its decision-making. Blockchain can mitigate both issues: its records are immutable, and its processes are fully transparent.
A Trend That Will Continue
Blockchain can also serve as the foundation for tokenizing real-world assets. For example, a property deed could be digitized and placed on-chain, making often complex property transactions secure, transparent, and near-instant.
For these reasons, many investment firms, such as Citadel and BlackRock, have explored the tokenization of stocks and bonds.
However, according to Citi’s Fraser, one of the strongest areas of opportunity for Citi lies in tokenized deposits. Tokenized deposits can offer the same speedy settlement and low fees as stablecoins, but within a regulated banking environment. This is one of the reasons tokenization initiatives have been taken up by organizations like the Bank of England and the Bank for International Settlements (BIS).
“I think tokenized deposits will be a big focus for financial institutions because private lending has grown immensely, just in the last year,” Joel Hugentobler, Cryptocurrency Analyst at Javelin Strategy & Research told PaymentsJournal. “More banks are putting assets like HELOCs and personal loans on chain, and it is much faster and more transparent for banks and consumers.”
“It’s a trend that’s going to continue—companies are going to continue to put funds and assets on-chain,” he said.
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