Judul : Citigroup to explore stablecoins as Hong Kong and US regulations evolve
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Citigroup to explore stablecoins as Hong Kong and US regulations evolve
Clients are eager but seek clarity on use cases and the coins' impact on balance sheets and liquidity, US bank's head of services says Companies are eager to explore the advantages of stablecoins as the world shifts rapidly towards instantaneous payments, clearing and settlements, but they want greater clarity on regulations and use cases, according to a senior Citigroup banker.
The observation came amid the US bank's effort to offer technology-enhanced services and its statement that it was looking at the issuance of a "Citi stablecoin". Stablecoins are digital tokens backed by fiat currencies or other reserve assets.
CEO Jane Fraser said during an earnings call on July 15 that the bank aimed to deliver the benefits of advancements in stablecoins and digital assets to its clients, which would help it modernise internal operations, unlock new revenue streams and acquire new clients. The comments came soon before the passage of US legislation on stablecoins, which could pave the way for more mainstream adoption of cryptocurrencies and digital assets.
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"Stablecoins are a global phenomenon," said Shahmir Khaliq, the New York-based head of services at Citigroup, who also noted Hong Kong's stablecoin ordinance, which passed in late May and takes effect on August 1.
"We welcome regulators providing us guidance and insight on the stablecoin landscape, allowing us to continue developing new services that help our clients run their businesses every day," he said in an interview on July 14 in Hong Kong.
However, while companies were curious about the blockchain technology behind stablecoins, a need existed for "clear accounting rules regarding stablecoins and their impact on balance sheets and liquidity", said Khaliq, who is also a member of Citigroup's executive management team.
"There needs to be more regulatory clarity," he added. "It's very early days in the process."
A primary application of stablecoins is as a mechanism for investors to hold and hedge crypto assets. But many uses were still under development, and more would emerge as regulatory clarity improved, attracting more interest, Khaliq said.
"Consumers and companies will have multiple payment options, and ultimately, the adoption of stablecoins will depend on factors like cost and ease of access," he said.
Citigroup would explore assisting its clients in reserve management, as stablecoins typically require reserves for backing, according to Khaliq. It would also facilitate conversion between fiat currencies and stablecoins, often referred to as on- and off-ramp services.
"For a financial ecosystem to function effectively, there needs to be the ability to connect to fiat currencies globally," he said. "Banks provide that crucial linkage, and this will continue to be an essential part of the digital-asset proposition."
Traditional financial institutions like Citigroup are responding to institutional and corporate client demand for real-time, around-the-clock payments, and settlement across borders and currencies to enhance liquidity and cash flow management.
Citigroup introduced token services last year, which are now live in four markets: the US, the UK, Singapore and, as of April, Hong Kong. Using distributed ledger technology and smart contracts, the services supported seamless and instant movement of liquidity between its clients' Citigroup accounts worldwide, the bank said.
Adoption of the offering had grown, with the bank processing "billions of dollars" in transaction value since its launch, it said.
In Hong Kong, major use cases of the bank's token services emerged after the move to a shorter settlement cycle in the US last year increased the need for rapid collateral posting and cash movement, Khaliq said.
"Whenever a bank, broker-dealer, or corporate entity operates in Hong Kong, the time zone is a significant consideration," he said. "[Citi Token Services] allows market participants to move money instantaneously between various time zones and continue making payments, thereby maximising the use of liquidity within their books."
"The movement towards using blockchain technology for instantaneous settlement and real-time confirmation is a natural progression towards a 24/7, always-on world. It's not a surprise, and we're excited about where the world is heading."
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This article originally appeared on the South China Morning Post (www.scmp.com), the leading news media reporting on China and Asia.
Copyright (c) 2025. South China Morning Post Publishers Ltd. All rights reserved.
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