BREAKING: Citibank Goes All-In On Crypto
Covered:
- Citibank Growing Their Digital Assets Team
- Crypto’s Role In Traditional Finance
Citibank Growing Their Digital Assets Team
Citigroup (NYSE:C), the fourth largest banking institution in the US has gone all-in on crypto. The banking behemoth announced today it is adding 100 people to “advance its blockchain and digital assets division.”
Citigroup, with trillions of dollars of assets, is a global powerhouse. This endorsement of crypto is a major sign of things to come in the legacy banking industry.
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Citi will also make Puneet Singhvi head of blockchain and digital assets for their “Global Markets Team” starting the 1st of December. The bank explained their decision in an email stating: “Prior to offering any products and services, we are studying these markets, as well as the evolving regulatory landscape and associated risks in order to meet our own regulatory frameworks and supervisory expectations.”
In March, Citi issued a 108-page report that noted the risks of Bitcoin, but also said Bitcoin “may be optimally positioned to become the preferred currency for global trade”. Citi is behind its peers, like Goldman Sachs, Bank of New York Mellon, and State Street–all of which have announced plans to engage with crypto on some level. Citi’s head of global exchange Itay Tuchman said then:
I don’t have any FOMO because I believe that crypto is here to stay and that we are just at the very beginning of the market.
Interestingly, Puneet and the division will be working “inside the institutional clients’ group” signaling that may be Citi’s focus in terms of digital assets. It has been reported since May of this year that Citi is looking to pivot towards digital assets. In May, Citi said that “trading, custody, and financing were all under consideration.”
In June, Citi made their first major foray into the space when they first launched their ‘digital assets’ division. Subsequent to the creation of the division, Citi cited “the exciting new developments we are seeing around cryptocurrencies, tokenization, and other advances powered by blockchain technology.” With this major expansion announced today, Citi appears to understand they must play the game or lose the game.
Crypto’s Role In Traditional Finance
With nuevo crypto-based banking services burgeoning across the board, like Coinbase, legacy banks are feeling the heat, as demand for crypto has increased exponentially this year. Traditional players are getting more than their feet wet. Earlier this year, Fidelity bought a large stake in Bitcoin mining giant Marathon, and just last week became “Canada’s first Bitcoin custodian.”
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A recent headline from the NY Times tells you all you need to know about the trajectory. “Banks Tried to Kill Crypto and Failed. Now They’re Embracing It (Slowly).” The story argues that banks feel their power waning in the face of innovative technology that crypto and crypto-related assets provide. Citi is just the latest bank to put their money where their mouth is and vastly expand their crypto operation.
We could be right at the beginning of a major shift towards digital assets being embraced in the banking sector. Last month, the FDIC Chairman said the regulatory authorities are exploring “how banks could hold crypto assets.” Hitherto, there has not been a clear path for banks to do so, for themselves or their clients. However, banks have been making ‘proxy investments’ in the crypto space for some time now, usually through funding rounds. Though, these investments are not generally in crypto-assets themselves, rather crypto-related entities.
We are getting ever-closer to banks buying and holding crypto assets for their clients, as business and payment solutions, and for their balance sheets. Regulators appear to be ready to make it happen. This transition to digital assets in the legacy banking system where hundreds of trillions exist will be the true moment when crypto “crosses the Rubicon”–but in the best way possible.
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Text source: CryptosRus
