Citigroup Explores Stablecoin Issuance as Major Banks Embrace Digital Assets

Citigroup, the third-largest U.S. bank, is actively considering issuing its own stablecoin as part of a broader digital payments strategy, CEO Jane Fraser revealed during a post-earnings conference call on Tuesday, according to Reuters .

"We are looking at the issuance of a Citi stablecoin, but probably most importantly is the tokenized deposit space, where we're very active," Fraser told analysts. "This is a good opportunity for us."

Beyond stablecoin issuance, Citigroup is exploring multiple avenues in the digital asset space. The bank is investigating reserve management services for stablecoins and developing custody solutions for crypto assets, Fraser confirmed.

The announcement came as Citigroup reported strong second-quarter results that beat Wall Street estimates, with shares briefly touching their highest level since the 2008 financial crisis. The bank also announced plans to buy back at least $4 billion in stock.

Regulatory Tailwinds Drive Bank Adoption

Fraser attributed the bank's increased crypto activity to the Trump administration's more favorable regulatory stance toward digital assets. She specifically welcomed "the administration's willingness to allow banks to participate in the digital asset space more easily," referencing President Trump's Genius Act, which introduces a regulatory framework for stablecoin issuers.

"Up until now, it has been hard for us to participate on a level playing field," Fraser noted, highlighting how regulatory clarity has opened new opportunities for traditional financial institutions.

The regulatory environment has indeed shifted significantly. Earlier this year, the Federal Reserve eliminated two supervisory rules that had required banks to notify regulators before engaging in crypto activities and obtain approval for stablecoin-related services. Congress is also reviewing landmark crypto legislation that would reverse restrictions imposed during the Biden administration.

Major Banks Race to Enter Stablecoin Market

Citigroup joins a growing list of major U.S. banks exploring stablecoin projects. JP Morgan, Bank of America, and Wells Fargo are all weighing similar stablecoin launches, signaling a broader industry shift toward blockchain-based financial products.

Internationally, Société Générale has taken the lead as the first major bank to issue a dollar-pegged cryptocurrency. The French bank's "USD CoinVertible" is set to launch on Ethereum and Solana public blockchains this month, setting a precedent for traditional banks entering the stablecoin market.

The timing coincides with explosive growth in the stablecoin sector. Market capitalization has increased significantly this year, with yield-bearing stablecoins now representing approximately 4.5% of the total market and maintaining a circulating supply of $11 billion.

Usage has expanded dramatically, with Tether reporting that more than 109 million wallets currently hold USDT, the leading stablecoin by market cap, in Q4 2024. The high-profile public listing of stablecoin issuer Circle earlier this year further demonstrated strong institutional and retail interest in the sector.

Strategic Positioning

Citigroup's move into stablecoins and tokenized deposits represents a strategic positioning for the future of digital payments. As one of the world's largest banks with extensive global operations, Citi's entry could significantly influence stablecoin adoption and legitimacy in traditional finance.

The bank's focus on tokenized deposits alongside stablecoin issuance suggests a comprehensive approach to blockchain-based financial services, potentially offering clients both payment solutions and yield-generating products.

This development positions Citigroup at the forefront of the traditional banking sector's digital transformation, as major financial institutions increasingly embrace blockchain technology to remain competitive in an evolving financial landscape.