U.S. financial services firm Citi considers offering Bitcoin services following a flood of interest from its clients. The firm is one of many banks that has warmed to cryptocurrency in recent times.
Although Citi has only signaled an interest at this time, a new custody initiative backed by Fidelity could soon see hundreds of U.S. banks offering Bitcoin services. And rather significantly from an adoption standpoint, not just for institutional players or high net worth individuals.
Citi Ready For A Bitcoin Explosion
Citi’s Global Head of Foreign Exchange, Itay Tuchman, said the company is thinking about entering the Bitcoin market. Despite the less than sound reputation of crypto, mounting interest in Bitcoin from asset managers and hedge funds has forced Citi into considering the move.
“We shouldn’t do anything that’s not safe and sound. We will jump in when we are confident that we can build something that benefits clients and that regulators can support.”
Tuchman said no decision had been made as to whether it would offer crypto services. However, under consideration were trading, custody, and financing options for clients.
“There are different options from our perspective and we are considering where we can best service clients. This is not going to be a prop-trading effort.”
Prop-trading, or proprietary trading, refers to a financial company trading its own funds for direct gain instead of earning a commission by trading on behalf of its clients.
During Q4 2020, a leaked Citi report showed a senior analyst giving a Bitcoin price prediction of $318k by December 2021. Global Head of CitiFX Technicals, Tom Fitzpatrick, wrote:
“The whole existence of bitcoin has been characterised by unthinkable rallies followed by painful corrections, the type of pattern that sustains a long term trend.” He asked, “Are we on the cusp of another such structural development?”
Banks Are Changing Their Tune
Lately, several large U.S. banking groups have announced they are working on introducing crypto services due to demand from clients. This includes BNY Mellon, Goldman Sachs, and Morgan Stanley.
But thanks to crypto custody firm NYDIG, customers of some U.S. banks will soon be able to buy, hold and sell Bitcoin via their existing accounts.
Head of Bank Solutions at NYDIG, Patrick Sells, said discussion with on-boarding big players is still ongoing at the moment. But hundreds of smaller banks have already enrolled in the program.
“What we’re doing is making it simple for everyday Americans and corporations to be able to buy bitcoin through their existing bank relationships. If I’m using my mobile application to do all of my banking, now I have the ability to buy, sell and hold bitcoin.”
NYDIG is a subsidiary of Stone Ridge asset managers, which has partnered with Fidelity National Information Services to offer the service.