Citi Group Considers Launching Crypto Services Amid Increased Customer Interest
Nicholas Otieno May 10, 2021 01:44
Citi Group discussed the possibility of launching crypto services for customers, just like Goldman Sachs enabled clients trade with Bitcoin-linked derivatives.
Cryptocurrency is taking another step towards mainstream adoption as prominent US banks are rushing to offer crypto services to customers.
According to the Financial Times, Citi Group is planning to enter the crypto space. The multinational investment bank appears to be in the early stages as it has not decided on specific crypto services it would offer. However, the bank is engaging in discussions regarding the roll-out of trading, financing, and custody of all crypto services.
Itay Tuchman, the global head of foreign exchange at Citi Group said that the bank has not yet decided whether it would offer clients crypto-related services, but trading, financing, and custody are all under consideration.
Tuchman told the Financial Times that the bank has witnessed a strong rapid increase of interest in Bitcoin across different types of clients including large asset managers. Tuchman said that the interests have come in the forms of requests for research while other clients want to trade a variety of crypto assets through the bank and finance deals with crypto holdings.
The development comes at a time when Goldman Sachs is digging deeper into the Bitcoin market with non-deliverable forward offerings – a derivative pegged to Bitcoin price that pays clients in fiat currency.
On Thursday, Goldman enabled institutional clients to trade with derivatives tied to Bitcoin prices. On the same day, Goldman told its market personnel that a newly launched crypto trading desk had successfully traded two types of Bitcoin-linked derivatives (non-deliverable forwards and cash-settled bitcoin futures).
Goldman is also selling and buying Bitcoin futures in block trades on CME Group, using Cumberland DRW LLC crypto trading firm as a partner to protect itself against the volatility risk of the crypto market.
Max Minton, Goldman’s Asia-Pacific head of digital assets, said that the new initiative is paving the way for Goldman to evolve its nascent cash-settled crypto capabilities.
“Institutional demand continues to grow significantly in this space, and being able to work with partners like Cumberland will help us expand our capabilities,” Minton said.
Apart from the above crypto offerings, Goldman also disclosed that it launched a new software platform that offers the latest crypto prices and news to clients.
However, an important piece of information to note is that Goldman is not in a position to trade Bitcoin or any crypto on a physical basis.
Bank Crypto Activity Taking Shape
The increase of Bitcoin prices coupled with Coinbase’s IPO debut has assisted in legitimizing Bitcoin and cryptos in the eyes of several skeptics and doubters.
Major US banks are developing their own blockchain-based systems to enable cryptocurrency services to their customers.
In March this year, Citi Group released a 108-report saying that Bitcoin may be optionally positioned to become the preferred currency for global trade.
Since then, the Bank of America chimed in saying that this year, total Bitcoin returns are already among the highest in its short history and investors have noticed.
Goldman Sachs followed suit by restarting its Bitcoin trading desk in March, a month as Bank of New York Mellon made an announcement it would provide crypto custody services to its asset management clients.
The rally in Bitcoin has been supported by the rising interests from institutional investors. Some firms, mainly Tesla, have also fueled the interest.
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