- Key insights: Citi and Coinbase's partnership will expand interoperability between stablecoins and fiat payments. Citi also expanded Citi Token Services into Japan and the United Arab Emirates.
- What's at stake: The partnership comes as more financial institutions push for interoperability with new payment technologies and businesses demand greater access to liquidity.
- Expert quote: "We've been putting a lot of time into how we help our clients release trapped liquidity around the world. Over 70% of the pain points that we're hearing from clients is coming from that release of liquidity." — Jane Fraser, CEO of Citigroup.
MIAMI — Citi took two steps on Monday to expand the reach of its digital asset infrastructure as the bank looks to make funds more fluid.
Citi and Coinbase are working to make stablecoins and fiat more interoperable. At the same time, the New York-based bank is expanding its
The moves are part of the bank's larger strategy to connect digital asset infrastructure with traditional finance infrastructure to release what Citi CEO Jane Fraser called "trapped liquidity."
"We've been putting a lot of time into how we help our clients release trapped liquidity around the world," Citi CEO Jane Fraser said during the keynote address at Sibos in Miami on Monday. "Over 70% of the pain points that we're hearing from clients is coming from that release of liquidity."
Citi on Monday said it was expanding its partnership with Coinbase to make stablecoins more interoperable with traditional bank rails. As part of that expansion, Citi's Virtual Account product will power Coinbase's virtual accounts, which will give Coinbase's customers
"Effectively that allows the connectivity between the fiat world and the digital asset world, and obviously that is pretty critical from our standpoint," Shahmir Khaliq, Citi's head of services, told American Banker following Fraser's keynote. "It allows interoperability in the world of fiat and digital assets."
Read more:
- As fintechs nab bank charters, what's happening to BaaS?
- Overheated data center knocked 23 credit unions offline
- Chris Britt still says banking is broken, but Chime can fix it
- Credit unions bulk up a business that banks long dominated
Citi's customers will also be able to accept stablecoin payments through Spring by Citi, its payment acceptance service. Coinbase Payments will power the stablecoin acceptance.
"Think of clients who are operating, for example, in the tech world, in the digital world," Khaliq said. "Some may receive stablecoins as a part of their payments because they're rendering services, and therefore their clients want to pay them in stablecoins because they operate in a digital asset world."
Separately, Citi also said it was expanding
Japan and the UAE "are significant financial centers with substantial cross-border flows and connecting them to Citi Token Services gives clients greater optionality to move and manage liquidity across regions and currencies in real-time," Stephen Randall, Citi's global head of liquidity management services said in a release.
Global consultancy firm Capgemini estimates that approximately $4 trillion is held globally in nostro and vostro accounts to support traditional cross-border settlement, according to the Capgemini World Payments Report. And 74% of corporations describe cross-border payments as slow.
"There's been a huge advancement across cross border payments over the last five to ten years, but still, corporates have not seen that," Michael Levens, Capgemini's vice president and financial services payments lead, told American Banker.
