Citigroup Returns to Cryptocurrency

According to the Financial Times, Citigroup is considering offering clients services such as cryptocurrency trading, custody and financing.

Apifiny CEO Haohan said: "Recently, customer demand for cryptocurrencies has been relatively strong. On this basis, institutions have begun to invest heavily in Bitcoin. It is not surprising that Citigroup is interested in cryptocurrency-related services."

CitiCoin’s Second Journey

In 2015, Citigroup launched the Citicoin project to test a token that connects global payments. The project was run by the Citi Innovation Lab in Dublin, but Citibank did not officially announce the project publicly.

Gulru Atak, head of Citibank’s Innovation Lab, revealed in 2019 that Citibank had abandoned plans to launch CitiCoin and said the company would focus on improving existing infrastructure. Atak emphasized that although CitiCoin was abandoned, Citibank would continue to explore broader blockchain technologies and applications.

Citibank's abandonment of the project comes as financial institutions around the world are rushing to join the cryptocurrency space as Bitcoin's price and popularity continue to rise. According to a report by Greenwich Associates, the financial services industry spent $1.7 billion annually on blockchain in 2018, a 67% increase in the budget for blockchain over the previous year.

Restarting Cryptocurrency

Today, as Bitcoin is experiencing its second explosion in growth, traditional banks are finding themselves in a similar situation. Some of the biggest names in finance, including Goldman Sachs, BNY Mellon and JP Morgan, have recently expressed plans to expand into digital asset investment tools and services.

“Citigroup recognizes that their customers want to own and trade cryptocurrencies through a reputable, trusted brand. Citigroup joins other mainstream financial institutions such as Goldman Sachs and JPMorgan Chase in developing products for their clients. This shows that cryptocurrencies are quickly becoming mainstream,” said Harold Montgomery, Managing Director of Wirex USA.

Citigroup isn’t the only bank to revisit past cryptocurrency-related initiatives. Goldman Sachs announced earlier this year that it was restarting a cryptocurrency trading platform after abandoning the short-lived project in 2018.

Goldman Sachs first launched its cryptocurrency services platform in 2018, just as bitcoin’s first big rally was coming to an end. As the price of the largest digital currency began to fall, investor and institutional interest began to wane.

Bitcoin FOMO sentiment

Bitcoin is up more than 480% in the past 12 months, and its returns have given investors and institutions a familiar FOMO. However, the industry has changed over the past two years, with or without the help of traditional institutions, and banks have had to adapt to those changes.

“Citigroup is likely to work with established companies in the cryptocurrency space to address the trading and custody challenges they will face,” said Apifiny CEO Haohan. “In addition, they will need to find new cryptocurrency products to provide clients with competitive advantages over their investment banking peers.”