Citigroup Eyes Issuance of Its Own Stablecoin to Boost Digital Payments

Speaking during the bank’s post–second-quarter earnings call, Fraser said the initiative focuses on deploying a “Citi stablecoin,” while also expanding into reserve management for stablecoins and custody services for crypto assets. The announcement coincided with Citigroup’s shares briefly reaching their highest level since the 2008 financial crisis, as the bank reported stronger-than-expected earnings and announced a $4 billion stock buyback.

Stablecoins are cryptocurrencies designed to maintain a stable value, typically by being backed by low-risk assets like U.S. dollars or government bonds. They offer fast, 24/7 transaction settlement, programmability, and potentially lower fees compared with traditional payment rails. Regulatory clarity and institutional involvement are key to enabling mainstream adoption.

In April, Citi’s internal report labeled 2025 a potential “blockchain’s ‘ChatGPT moment’,” suggesting a tipping point driven by stablecoins' mainstream integration. The report projects that if current trends hold, stablecoin market capitalization could rise from roughly $230 billion today to between $1.6 trillion (base case) and $3.7 trillion by 2030.

Fraser’s comments highlighted a multifaceted approach:

1. Issuance of a Citi-branded stablecoin – aimed at facilitating digital dollar-denominated transactions.

2. Reserve management solutions – ensuring liquid, transparent backing for token issuance.

3. Crypto custody services – offering institutional-grade secure storage for digital assets.

This places Citigroup among a broader wave of traditional banks adapting to evolving payment infrastructure. JPMorgan, for instance, is also deepening its involvement, expanding its private JPMD deposit token and broader stablecoin activities. Meanwhile, Mastercard has publicly supported third-party stablecoin partners, though it remains cautious about mainstream readiness.

The U.S. is actively shaping stablecoin regulation. The House was considering pro-crypto legislation such as the GENIUS Act, aimed at providing clearer frameworks for issuers. Lawmakers see stablecoins as tools of innovation, while central bank leaders are placing cautious parameters around adoption.

In contrast, UK officials have taken a more skeptical stance. Andrew Bailey, governor of the Bank of England, recently warned that privately issued stablecoins could undermine banking systems and monetary control, urging a shift toward tokenized bank deposits or CBDCs over private coin issuance.

Citi’s forecast links stablecoin expansion to increased demand for U.S. Treasuries. As issuers back tokens with safe assets, they may become major Treasury holders, potentially rivaling sovereign states by 2030. By May, Citi analysts noted this could lead stablecoin issuers to hold over $1 trillion in T-bills, reshaping bond markets and liquidity dynamics.

Despite their advantages, stablecoins present risks:

• De-pegging incidents: Citi tracked nearly 1,900 short-lived peg breaks in 2023 alone, including more than 600 affecting major coins. A de-peg event could trigger market sell-offs and contagion.

• Banking disruption: If stablecoins draw deposits from the conventional banking system, they could disrupt credit supply, a key concern of regulators.

• Regulatory fragmentation: With varying global approaches, some favoring CBDCs, others permitting private coins, stablecoins may see uneven adoption and cross-border friction.

Yet the business case for banks remains strong. They can support issuance, liquidity, custody, payments settlements and leverage their existing infrastructure to integrate digital currencies into mainstream financial services.

Citi’s moves remain exploratory, the bank is assessing compliance frameworks, supply chain dynamics, and infrastructure requirements before launching a Citigroup-branded stablecoin. Fraser noted that tokenized deposits are “where we’re very active,” suggesting the issuer trail may follow once a suitable regulatory environment is in place.

The pace of U.S. regulation will play a decisive role. If federal legislation clarifies reserve standards, custody rules, and consumer protections, banks may accelerate issuance and deployment. Conversely, if oversight lags or global regulators fragment, market momentum could stall.

Citigroup’s consideration of its own stablecoin underscores a broader strategic shift among major financial institutions. With proven potential to streamline payments, enhance liquidity, and introduce programmability into finance, stablecoins represent both opportunity and risk.