Citi is reportedly planning to introduce a cryptocurrency custody service next year.
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The company is making progress on the crypto custody service project it began roughly three years ago, said Biswarup Chatterjee, global head of partnerships and innovation in the services business at the banking giant, CNBC reported Monday (Oct. 13).
“We have various kinds of explorations … and we’re hoping that in the next few quarters, we can come to market with a credible custody solution that we can offer to our asset managers and other clients,” Chatterjee said, per the report.
The upcoming custody service would involve Citi holding the native cryptocurrency, the report said. There are risks with all forms of custody, like cyberattacks leading to theft of assets. Banks could offer an alternative as they are tightly regulated and have a track record in asset custody.
Citi is exploring the use of an in-house developed technology solution for custody, along with third-party partnerships, according to the report.
“We may have certain solutions that are completely designed and built in-house that are targeted towards certain assets and certain segments of our clients, whereas we may use a … third-party, lightweight, nimble solution for other kinds of assets,” Chatterjee said, per the report. “So, we’re not currently ruling out anything.”
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Traditional financial institutions have historically shied away from crypto, the report said. However, after the passage of the GENIUS Act, which regulates stablecoins, financial institutions have begun launching digital asset-related products and services.
Custody of crypto assets “is fast becoming one of the defining battlegrounds in the broader institutionalization of digital finance,” PYMNTS wrote Oct. 1 in the wake of a letter from the Securities and Exchange Commission.
The letter said SEC staff would not call for enforcement action against registered investment advisers or regulated funds that maintain crypto assets and related cash equivalents with certain state-chartered financial institutions.
“For too long, registered advisers and regulated funds have been caught up in a guessing game as to whether their entity of choice for crypto asset custody, which also may be the only available custodian for such service, is a permissible custodian under the custody provisions of the Investment Advisers Act of 1940,” SEC Commissioner Hester Peirce said in a statement.
“Regulatory gray zones can harm investors, as this one has,” she added.
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