What is the point of Citi embracing Crypto?
Is Citi capable of filling the gap left by Tesla?
Not that long ago, we covered how Citi had some problems with Financial Times after they published their ‘At the Tipping Point’ report touching on bitcoin. Now the dust has already settled.
Back then (which was a few months ago), some big financial institutions were already dipping their hands in the cryptocurrencies’ market, one of them being BNY Mellon. But today, let’s look closely at how Citi is preparing to enter the world of cryptocurrencies.
The bitcoin price started to collapse some time ago, which appeared to be a catastrophe for a lot of inexperienced investors. Elon Musk made a U-turn for the whole ecosystem, accepting the bitcoin payments for his cars. And while it caused a vast and wild growth, the price dropped a few weeks later, and is staying well below the mark it reached in April.
The mixed approaches to Bitcoin
The further drops happened in May and June after some really influential miners from China ceased to continue their actions, and it really had nothing to do with Musk’s argument on how the crypto affects the environment. The World Economic Forum issued a story which explained how we could use cryptocurrencies and blockchain to build a sustainable, greener future.
Stephen Sonberg, who works as the Bittrex Global CEO, pointed out how, the conventional financial system needs more energy than the network created by Bitcoin. It consists of thousands of disparate parts, which together create the international financial outlook. Every single business that contributes to that - uses energy, which summed up gives the amount higher than the one needed by Bitcoin. We’re speaking the banks, the systems’ providers, the credit cards, and even the ATMs - it all requires energy.
While Elon Musk shifted his interests to Dogecoin and started to wonder where his next factory shall be placed, the bitcoin holders have been left clueless, with no signs of things getting better (at least for now). So maybe (but only maybe), this is the perfect time for Citi to step in and introduce some ‘corrections’?
Citi is growing
The CEO of Citi, Jane Fraser, has been there for the quite successful period of the bank. She managed to navigate through the year (so far) without major scandals. We cannot say this about Credit Suisse and Goldman Sachs, which had to deal with disgruntled and overworked employees, and with major international disruptions. Instead of damage control, Fraser could focus on sharing her cryptocurrency policy with the United States Senate Banking Committee. She dwelled on the ‘measured approach’ to crypto, and the bank’s plans to understand digital assets changes, as well as the use of technology. This includes the demands of the clients, the developments of the regulators, and further advancements in the technology.
Fraser also pointed out, that before her bank finally decides to engage with crypto, they need to ensure that they operate with proper governance and control. And this point is something that might take a bit of time, as the frameworks of the whole process are still a work-in-progress.
Itay Tuchman, the Citi’s Global Head of Foreign Exchange, could also be heard speaking about the matter. He admitted that Citi is considering custody, financing, and trading with cryptocurrencies. These are two sufficient signs that we might be seeing Citi join JP Morgan, BNY Mellon, Morgan Stanley, and others in the space of cryptocurrencies.
And as the market and media widely commented Citi’s Bitcoin report, after a few months it looks like all that was a perfectly timed operation. There already are some information about the new structures in Citi, that are currently (or in some near future) being shaped. We are also presented some names that may be taking part in the endeavor.
If you want to know the details of the Citi’s plans of establishing new division, you should definitely join Disruption Banking website, where you’ll find all the valuable information. Use the following link to access Andy Samu’s piece about Citi’s future cryptocurrency engagements: https://disruptionbanking.com/2021/06/28/why-is-citi-embracing-crypto/.