Citigroup Gets Back into Crypto

Two years after abandoning its stalled ‘CitiCoin’ crypto experiment, Citigroup may be jumping back on the digital asset bandwagon. 

The bank is considering offering client cryptocurrency services, potentially including trading, custody and financing, the Financial Times reported Friday. 

“Citigroup’s interest in crypto-related services is not surprising given the recent spate of institutional investments in bitcoin driven by strong client demand,” said Haohan Xu, CEO of Apifiny. 

CitiCoin part deux

Citi first began exploring a token connected to global payments back in 2015. The project, known as CitiCoin, was explored by Citi’s innovation lab in Dublin, but was never formally announced by the bank. 

Gulru Atak, head of the innovation team, revealed in 2019 Citi was no longer pursuing CitiCoin, stating that the firm would instead be working to improve its existing infrastructure. Atak stressed that while CitiCoin will not reach fruition, the bank will continue to explore broader blockchain technology and applications. 

The project was abandoned at a time where financial institutions worldwide were scrambling to get in on crypto as bitcoin continued to rise in price and popularity. In 2018, financial services companies were spending $1.7 billion a year on blockchain initiatives, a 67% increase in blockchain budgets from the year prior, according to a report from Greenwich Associates. 

Crypto revisited

With bitcoin today experiencing its second major run, banks now find themselves in a similar situation. Goldman Sachs, BNY Mellon and JP Morgan are just some of the big names in finance that have recently expressed plans to expand into digital asset investment vehicles and services.   

“Citigroup is recognizing that their clients want to own and trade cryptos through trusted brand names with established reputations,”  said Harold Montgomery, managing director at Wirex USA. “Citi joins the likes of other mainstream financial institutions like Goldman Sachs and JP Morgan, which are also developing offerings for their clients. All of these developments are a sign that crypto is quite rapidly becoming mainstream by anyone’s measure.”

Citi isn’t the only bank revisiting past crypto-related plans. Goldman Sachs announced earlier this year that it will restart its cryptocurrency trading desk after abandoning the short-lived project in 2018. 

Goldman first launched its crypto desk in 2018, right as bitcoin’s first major rally was coming to a close. As the largest digital currency’s price began to falter, so did investor and institutional interest. 

Bitcoin FOMO

Today, bitcoin is up more than 480% over the past 12 months, and the returns have investors and institutions feeling a familiar sense of FOMO. The industry has evolved however in the past two years, with or without help from traditional institutions, and banks will have to adapt to the changes. 

“Citigroup will very likely have to partner with established companies in the crypto space to tackle trading and custody challenges they will face,” said Xu. “In addition, they will need to find new crypto products to offer their clients to gain a competitive edge against their investment bank counterparts.”