Citigroup, one of the world’s largest banking institutions, is actively exploring the launch of a proprietary stablecoin to facilitate cross-border payments, CEO Jane Fraser confirmed this week.
The move marks a significant step in the increasing integration of traditional finance with digital assets, as major U.S. and global banks seek to compete with crypto-native firms in the rapidly growing $250 billion stablecoin market.
Speaking during an earnings call on Tuesday, Fraser said Citi is “looking at the issuance of a Citi stablecoin,” and emphasized the bank’s focus on supporting infrastructure around reserve management, cash-to-coin conversion, and on- and off-ramp services for clients.
The development comes as Citi aims to modernize its global payments infrastructure, which processes $5 trillion in cross-border flows per day, by adopting blockchain-based technologies.
“We really welcome the administration's willingness to allow banks to participate in the digital asset space more easily,” Fraser said. “Clients… want multi-asset, always-on, cross-border payments for financing and liquidity.”
Citi's Growing Involvement in Stablecoins and Blockchain
This isn’t Citi’s first step into the stablecoin or tokenized payments space. The bank already operates Citi Token Services, a platform for tokenized deposits that enables real-time cross-border payments and automated trade finance operations. The service is currently live in four markets, and forms part of Citi’s broader blockchain strategy to streamline global financial flows.
Still, the move to issue a Citi-branded stablecoin would mark a more ambitious pivot, positioning the bank as a direct competitor to existing stablecoin issuers like Tether and Circle, as well as rivals like JPMorgan, Bank of America, and Morgan Stanley, who are each in various stages of stablecoin exploration.
In May, The Wall Street Journal reported that Citi was engaged in discussions with JPMorgan Chase, Bank of America, and Wells Fargo about jointly developing a dollar-pegged token, indicating institutional appetite for collective entry into the stablecoin market. Although those plans have not yet materialized into a joint launch, the individual momentum from each bank is accelerating.
TradFi’s Race Toward Stablecoins
Citi’s exploration comes amid a wave of stablecoin interest from traditional financial giants:
- Bank of America CEO Brian Moynihan confirmed this week that the bank is actively developing a stablecoin project.
- Morgan Stanley acknowledged in its Q2 briefing that it is assessing stablecoin use cases for institutional clients.
- JPMorgan CEO Jamie Dimon, long a vocal critic of decentralized crypto, has nonetheless continued expanding JPM Coin, the bank’s own permissioned blockchain settlement token.
Meanwhile, Standard Chartered’s global head of digital assets research, Geoffrey Kendrick, projected earlier this week that the stablecoin market could triple in size by 2026, reaching a valuation of over $750 billion. That expansion would bring stablecoins closer to mainstream adoption, particularly as tools for payments, trade finance, and remittances — core strengths of the global banking sector.
Seeking Regulatory Clarity in a New Era
Fraser framed Citi’s stablecoin ambitions within the context of pending U.S. regulation, which is expected to provide formal guidelines for bank-issued stablecoins by late 2025.
While the exact provisions of the forthcoming legislation are still in flux, industry insiders expect a tiered licensing model, where federally regulated financial institutions will receive priority access to issue dollar-pegged stablecoins — effectively crowding out unregulated offshore issuers.
“We want to operate on a level playing field,” Fraser emphasized, echoing a frequent criticism among bank executives who argue that firms like Tether face lower compliance burdens despite commanding large transaction volumes.
Indeed, Tether (USDT) remains the dominant stablecoin, with over $127 billion in 24-hour volume as of Tuesday, according to CoinMarketCap. In contrast, U.S.-based Circle’s USDC processed just under $16 billion during the same period — a gap that institutions like Citi and Bank of America are keen to close.
The Payments Battleground: Fees, Friction, and Liquidity
Citi's potential stablecoin rollout is also driven by client demand for cheaper, faster international payments. According to Fraser, the current system remains plagued by high fees and settlement delays, particularly in emerging markets.
While some stablecoin providers boast transaction costs as low as 0.5% to 3%, Fraser said that “right now, you’re incurring as much as a 7% transaction cost.”
That cost differential — combined with limited interoperability and slow clearing in legacy correspondent banking networks — creates a strong use case for blockchain-based payment rails that offer instant settlement, 24/7 availability, and programmable logic for treasury and trade finance operations.
By leveraging tokenized deposits and potentially issuing a stablecoin, Citi hopes to reduce those frictions while maintaining compliance-grade monitoring, especially amid growing scrutiny from the Financial Stability Oversight Council (FSOC) and international regulators.
Why Stablecoins Now?
Stablecoins, once considered fringe instruments primarily used on decentralized exchanges, have rapidly entered mainstream financial discourse due to several converging factors:
- Institutional Adoption: BlackRock’s BUIDL fund, PayPal’s PYUSD, and Visa’s on-chain pilot programs have legitimized stablecoins for use in treasury management and payments.
- Regulatory Progress: The U.S. and EU are now laying the groundwork for regulated stablecoins under legislation like the EU’s MiCA and the anticipated U.S. Stablecoin Act.
- Geopolitical Shifts: With SWIFT fragmentation and rising dollarization concerns in emerging markets, stablecoins offer a dollar proxy that’s faster and more accessible than bank wires.
- Technological Maturity: Improvements in Layer-2 scaling and blockchain interoperability are making stablecoin settlements more efficient and secure.
Retail and Remittance Demand: Migrant workers and businesses increasingly rely on stablecoins to bypass expensive money transfer operators like Western Union or MoneyGram.
Challenges Ahead for Citi and Institutional Issuers
While Citi’s entry could bring legitimacy and liquidity to the stablecoin market, it also faces significant headwinds:
- Technical Risk: Building a scalable, compliant stablecoin infrastructure — especially across jurisdictions — is complex and resource-intensive.
- Interoperability Concerns: Competing bank-issued stablecoins could result in a fragmented landscape unless standards emerge for cross-issuance and settlement.
- Adoption Hurdles: Institutional clients may hesitate to adopt a new Citi token unless it achieves significant liquidity and ecosystem integration.
- Reputational Risk: Any issues with depegging, compliance lapses, or technical exploits could reflect poorly on Citi’s brand.
###Final thoughts
Citi’s announcement adds to mounting evidence that 2025 is shaping up to be a pivotal year for stablecoin institutionalization. With banking giants racing to launch compliant, fiat-backed tokens, the stablecoin landscape may soon be dominated by TradFi players — a reversal from previous years where unregulated issuers led the charge.
The industry now waits for Citi to release further details: Will it issue a public, permissionless stablecoin? Will it be interoperable with other chains? Will it seek regulatory approval before launch?
Whatever the answers, Citi’s entry into the stablecoin space signals that the battle for the future of money is no longer between banks and crypto — but increasingly within a blended system, where compliance, programmability, and on-chain liquidity all converge.