Industry News CitiBank is Looking to move into Crypto

CitiBank is Looking to move into Crypto

May 11, 2021

Another huge financial entity is apparently looking for a way to enter the crypto markets. That entity is none other than the world-famous CitiBank and the implications of that possibility are already reverberating in the crypto community. Apparently, this financial institution is contemplating a move that would offer it access to the crypto markets and allow its clients to dabble in the same investment domain. The key reason why this is happening is the completely understandable soaring interest among its clients. After all, anyone who is into financial news could not have stayed blind to the 2020/21 bull run in the crypto domain, which is still rolling on and even gaining strength.

Because of it, Citi is only the latest traditional financial institution that is seeking its potential entry into the very dynamic and very lucrative financial market for digital currencies. While presently very little is concretely known about the process and how Citi might take it on (even if it truly will do the same) analysts are already speculating about the impact of such a move. That applies to both the financial giant but also the markets it seeks to – potentially – enter.

Financial Times Report

In the previous year or so, there have been a whole bunch of rumors circulating online and in business circles about the prospects of institutional adoption of crypto. Often, these rumors have been completely baseless. Reasons for them are practically endless, but the thing that fueled most of them was the sheer fact that the market seems all-powerful. It was back in 2020 when the huge market crash of March took place. Yet, today just a year later, there is a strong sense that anything could occur with the cryptocurrency prices.

In that environment, rumors are bound to spread like wildfire. Because of that fact many are still incredibly apprehensive about any news that a huge financial entity like Citibank might have anything to do with the crypto markets. However, this latest piece of news is coming from none other than the Financial Times. With its credibility and a clear dedication to actual news, there is a level of certainty that the present rumor is most likely true, at least on some level. This means that Citibank truly is considering some shape or form of financial services that would allow their clients to gain access to the cryptocurrency domain.

Citibank Response

It is also interesting to note that Citibank representatives were quick to comment on the same rumor, which almost certainly would not have happened only a year or two prior to this. The key voice so far has been Itay Tuchman. He is the bank’s global head of foreign exchange and he told the famous news outlet that the bank so far did not make any definite decision on this issue. He did however confirm that the boom in the client interest is not something they are not aware of. Because of that, the bank really is considering this possibility and exploring ways how this could be done in their present setup.

In this regard, the same financial juggernaut is facing potential issues like any other business entity that wants to incorporate cryptocurrencies – how to do it on a practical level and how deep and wide should the same integration go. This is something that everyone who uses crypto, from esports tournaments to payment processing platforms, faces when they opt for the same option. The same set of issues is made even bigger when a massive Citibank system of settlements and other factors is taken into consideration.

Financial Procedures

One thing is certain – no matter what Citibank ends up deciding, it will not get cryptocurrency options to its customers overnight. That includes the very unlikely sudden positive response, where the bank decides to go all-in on crypto tokens. Instead, it has to consider things like custody of tokens or other financial vehicles, trading, and financing, all of which are essential services in the bank’s offer. Tuchman stated to the Financial Times that the Citibank experts are well aware of that problem.

That is why many of them are likely working on potential routes into the crypto territory, all with a different degree of difficulty and potential. This process also shows that any such integration of crypto services into a traditional banking system is not just a question of will to do so. Instead, it also demands a level of technical support and technical understanding from the top management that can both understand what they are seeking and have the technology to provide that without disrupting the system. One of the more easily possible scenarios would include the bank adding crypto but only to figure out that it is hampering their traditional services in some manner. That would be a crippling shot in the foot that Citibank is likely determined to avoid at all costs.

Regulatory Concerns

On top of the layer that mixes in all of these technical and conceptual questions about crypto services, Cibitbank is considering much more financially damaging possibilities. These mainly have to do with the chance of some kind of heavy-handed regulatory U-turn that begins a wider cryptocurrency crackdown in the US. This is a topic that is on the mind of all those who are heavily invested in bitcoin BTC tokens or any other digital currency.

For now, the hands-off approach that the US government took, along with most other countries relevant to the crypto industry, has been a big boon for the 2020 rally. But, Citibank is aware, like any other massive financial entity, that regulators cannot sit on their hands when something big is brewing in the same field. This is also the reason why Tuchman underlined that once Citibank is certain that the regulatory framework is in place, it will jump into the crypto domain. However, other entities like JPMorgan, already have their foot in the door of the crypto markets. While Citibank might believe its management is not suffering from a case of FOMO, it cannot be seen as someone who is ignoring business opportunities.

Source: Forbes