Citigroup invested in stablecoin infrastructure firm BVNK by way of its enterprise capital arm Citi Ventures, which is a pointy reversal from the financial institution’s earlier warnings about deposit flight dangers from yield-bearing stablecoins.
BVNK’s core know-how operates as a funds rail facilitating world stablecoin transactions, permitting clients to maneuver cash between fiat and cryptocurrency.
US Regulatory Readability Drives Stablecoin Infrastructure Progress
In response to CNBC, the corporate declined to reveal Citi’s funding quantity or its present valuation.
Nevertheless, co-founder Chris Harmse confirmed the valuation exceeds the $750 million publicly disclosed at its final funding spherical.
BVNK, additionally backed by Coinbase and Tiger International, operates in a extremely aggressive area alongside newcomers like Alchemy Pay and TripleA, in addition to established gamers like Ripple vying for the cross-border digital cash market.
Harmse stated the corporate is experiencing momentum, significantly in the US, which has been its fastest-growing market over the previous 12 to 18 months following the passage of the GENIUS Act earlier this yr.
The laws established regulatory readability for the stablecoin market, creating what the trade views as a extra favorable setting.
The funding comes as CEO Jane Fraser confirmed in July that Citigroup is contemplating issuing its personal stablecoin and creating custodian companies for crypto belongings.
Fraser stated the financial institution goals to ship “the advantages of developments in stablecoin and digital belongings to our purchasers in a secure and sound method by modernizing our personal infrastructure.”
Banking Trade Break up Over Stablecoin Competitors
The backing arrives simply months after Citigroup analyst Ronit Ghose warned in August that stablecoin curiosity funds may set off Eighties-style deposit flight from conventional banks.
Ghose drew parallels to the late Nineteen Seventies and early Eighties when cash market funds skyrocketed from $4 billion to $235 billion in seven years, draining deposits from banks whose deposit charges had been tightly regulated.
Main U.S. banking teams, together with the American Bankers Affiliation and Financial institution Coverage Institute, lobbied Congress to shut what they referred to as a “loophole” within the GENIUS Act permitting crypto exchanges and affiliated companies to supply yields on third-party stablecoins.
The teams cited Treasury estimates suggesting yield-bearing stablecoins may end in as much as $6.6 trillion in deposit outflows, basically altering how banks fund loans.
Nevertheless, crypto trade teams pushed again towards these considerations.
Coinbase Chief Authorized Officer Paul Grewal dismissed the banking foyer’s efforts, calling it an “unrestrained effort to keep away from competitors.”
This was no loophole and you already know it. 376 Democrats and Republicans within the Home and Senate rejected your unrestrained effort to keep away from competitors. So did one President. It's time to maneuver on. https://t.co/CGCGxDqKNa
— paulgrewal.eth (@iampaulgrewal) August 13, 2025
On the similar time, the Crypto Council for Innovation argued that limiting stablecoin yields would “tilt the enjoying discipline in favour of legacy establishments” and stifle shopper selection.
Simply final month, Coinbase analysis discovered no significant correlation between stablecoin adoption and deposit flight for neighborhood banks over the previous 5 years.
The obvious contradiction between Ghose’s warnings and Citi’s funding might need resulted from the simultaneous worry and embrace of stablecoin know-how.
Fraser emphasised in the course of the financial institution’s July earnings name that “digital belongings are the subsequent evolution within the broader digitization of funds, financing, and liquidity” and that the financial institution’s focus stays on assembly consumer wants.
Wall Avenue Accelerates Digital Asset Integration
JPMorgan Chase additionally launched its personal stablecoin-like token referred to as JPMD this yr, after earlier permitting purchasers to purchase bitcoin.
Financial institution of New York Mellon is already testing tokenized deposits, whereas HSBC has additionally launched a tokenized deposit service, as conventional monetary establishments race to combine blockchain know-how.
Within the final 30 days alone, stablecoins processed over $5 trillion in transactions, in line with Visa, whereas complete stablecoin market capitalization has exceeded $300 billion per DefiLlama information.
The belongings have advanced from instruments for rapidly buying and selling out and in of cryptocurrencies like Bitcoin to potential infrastructure for cross-border transactions as a consequence of velocity, low price, and 24/7 settlement capabilities.
Treasury Secretary Scott Bessent not too long ago expressed help for stablecoin adoption, arguing that “stablecoins will broaden greenback entry for billions throughout the globe and result in a surge in demand for U.S. Treasuries” as backing belongings.
Implementing the GENIUS Act is crucial to securing American management in digital belongings.
Stablecoins will broaden greenback entry for billions throughout the globe and result in a surge in demand for U.S. Treasuries, which again stablecoins.
It’s a win-win-win for everybody concerned:… https://t.co/p5nRQpBfnw— Treasury Secretary Scott Bessent (@SecScottBessent) August 18, 2025
For this newest backing, Harmse stated BVNK has “dipped out and in of profitability” as the corporate invested in development, however is on observe to be worthwhile subsequent yr.
He famous that “U.S. banks on the scale of Citi, due to the GENIUS Act, are placing their weight behind investing in main companies within the area to ensure they’re at forefront of this technological shift in funds.“
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