Citi backs stablecoin company as major banks get excited about cryptocurrencies

Citi has invested in stablecoin infrastructure company BVNK, the startup told CNBC on Thursday, as major U.S. banks increase their presence in the cryptocurrencies and digital assets space.

Stablecoins are a type of digital asset that is pegged to fiat currency and backed by real-world assets such as bonds. The two largest companies are Tether, which issues USDC and USDT.

BVNK’s core technology is effectively a payment rail that facilitates transactions in stablecoins around the world, allowing customers to move money from fiat to crypto and back.

The company declined to disclose the amount of Citi’s investment or its current valuation. However, BVNK co-founder Chris Harms said in an interview with CNBC that the valuation is higher than the $750 million announced in the previous funding round.

The investment was made by venture capital arm Citi Ventures. citygroup.

Stablecoins were once just a tool for people to quickly trade to and from other cryptocurrencies. Bitcoindue to its speed of sending and receiving, low costs, and 24/7 settlement, it is currently considered a potentially important tool for cross-border transactions.

According to Visa, there has been $9 trillion worth of stablecoin transactions in the past 12 months, while the current valuation of all stablecoins in existence is more than $300 billion, according to data from CoinMarketCap.

BVNK’s Halmse said the company has particular momentum in the US, which has been its fastest growing market over the past 12 to 18 months, thanks to what the crypto industry sees as a more favorable regulatory environment.

Earlier this year, the United States passed the GENIUS Act, a bill aimed at regulating and providing greater clarity for the stablecoin market.

“With the passage of the GENIUS Act and regulatory clarity, we are seeing an explosion in demand for building on top of stablecoin infrastructure,” Harmse told CNBC.

BVNK’s technology can be used by customers to pay suppliers, contractors, or distributors in other countries. The company aims to expand its customer base, including digital-only banks and neobanks that may use stablecoins for their core checking accounts, Harmse said.

The co-founder declined to go into details about the work with Citi, saying it was “too early to announce,” but noted that the Wall Street bank is ramping up its cross-border payment services.

“Thanks to the GENIUS Act, a U.S. bank of Citi’s size is focused on investing in leading companies in this space to ensure we are at the forefront of technological change in payments,” Harmse said.

Citi announced its entry into cryptocurrencies this year. CEO Jane Fraser said in June that the company is considering issuing its own stablecoin and is interested in providing custodian services for crypto assets.

Halmse said BVNK has been investing in growth and has seen “profitability go up and down,” adding that the company is on track to become profitable next year. Also supported by BVNK coinbase and Tiger Global.

The startup plays in a competitive field with other startups like Alchemy Pay and Triple A as well as established players like Ripple looking to grab a slice of the cross-border digital money pie.

Citi is not the only major U.S. bank or financial institution embracing digital assets.

JPMorgan Chase launched its own stablecoin-like token called JPMD this year. The bank also decided to allow customers to buy Bitcoin this year.

Banks have been looking at ways to use blockchain, the technology originally developed to underpin Bitcoin, to reduce costs and speed up different types of transactions. This includes “tokenization”. This broadly refers to the idea of ​​issuing digital tokens that represent things like deposits.

new york mellon bankFor example, we are looking at tokenized deposits. HSBC has already launched tokenized deposit services.