Citigroup Enters the Stablecoin Race After JPMorgan

Citigroup CEO Jane Fraser recently stated that her company is exploring the stablecoin sector and may launch its own token. The banking titan is also exploring custody solutions and reserve management for other stablecoins.

The bank’s own researchers are highly bullish on stablecoins’ prospects, but that isn’t the whole picture. JPMorgan is also joining the race despite CEO Jamie Dimon’s reservations, showing the overwhelming pressure to enter this market.

More Banking Giants Are Venturing Into Stablecoins

The stablecoin market has been going crazy lately, with activity surges on multiple blockchains and high expectations from impending new laws.

In late May, several leading investment banks explored launching a joint stablecoin, but Citigroup is now planning to enter the market sector itself.

“We are looking at the issuance of a Citi stablecoin, but probably most importantly is the tokenized deposit space, where we’re very active. This is a good opportunity for us,” claimed Jane Fraser, Citigroup’s CEO.

Earlier this April, Citigroup researchers predicted that the stablecoin market would reach $3.7 trillion by 2030, so this development makes sense.

The prominent TradFi institution is also considering reserve management for stablecoins and providing custody solutions for cryptoassets.

Additionally, Citigroup’s stock recently hit its highest valuation since 2008, making this a ripe moment for new expansions. Still, that doesn’t completely explain the bank’s recent commitment to the stablecoin sector.

Fraser’s comment about tokenized deposits might represent an important piece of insight. Tokenized deposits are a step in the right direction, but more will follow.

JPMorgan, one of the other leading banks in the aforementioned joint stablecoin proposal, also started with these assets.

In June, there were persistent rumors that JPMorgan would launch a stablecoin, but this was slightly garbled. Instead, the bank only planned a deposit-based token. Nonetheless, CEO Jamie Dimon is reluctantly joining the sector one month later:

“We’re going to be involved in both JPMorgan deposit coin and stablecoins to understand it, to be good at it. I don’t know why you’d want to [use a] stablecoin as opposed to just payment. [However, our competitors] are trying to figure out a way… to get into payment systems and rewards programs, and we have to be cognizant of that. And the way to be cognizant is to be involved,” Dimon claimed in a recent earnings call.

Indeed, JPMorgan recently predicted that stablecoins might underperform Citigroup’s bullish expectations. Nonetheless, market forces are compelling the bank to explore the industry.

In other words, Citigroup is already optimistic about stablecoins, but this optimism isn’t the entire picture. TradFi institutions are turning to this industry en masse, and it doesn’t pay to be a latecomer.

If Citigroup and JPMorgan both make a strong commitment now, they could attract the attention of several other leading firms.