Financial giant Citigroup considers providing custody and payment services for exchange-traded funds (ETFs) based on cryptocurrencies and stablecoins.

Financial giant Citigroup considers providing custody and payment services for exchange-traded funds (ETFs) based on cryptocurrencies and stablecoins.

The market landscape for crypto exchange-traded funds (ETFs) custody services is rapidly changing, driven by increased regulatory scrutiny, institutional adoption, and operational innovations. Custody remains a core concern for regulators, who mandate stringent safeguards on how crypto assets behind ETFs are stored and transferred.

Key market dynamics include the U.S. Securities and Exchange Commission's (SEC) July 2025 guidance, which sharply tightened oversight on crypto exchange-traded products (ETPs), particularly for non-Bitcoin/Ethereum crypto assets. The SEC also recently approved an "In-Kind Order" allowing authorized participants to perform in-kind creations and redemptions of Bitcoin and Ethereum ETFs, enhancing operational efficiency and potentially reducing costs and tax inefficiencies for investors.

U.S. federal banking regulators have issued guidance facilitating banks to offer crypto-asset safekeeping services, signaling greater institutional acceptance and the rise of bank-based crypto custody offerings. Jurisdictions like France are strengthening legal frameworks around digital asset pledges and custody, supporting the broader infrastructure required for institutional-grade crypto custody. The SEC’s “Project Crypto,” launched in mid-2025, underscores the agency’s focus on modernizing custody rules, enabling hybrid platforms combining crypto custody, trading, staking, and lending services, and streamlining regulatory compliance for market intermediaries.

Major players in the crypto ETF custody services market include Citigroup, Coinbase, and other institutional custodians. Citigroup, an institutional custodian offering crypto-asset safekeeping services leveraging recent regulatory clearances for banks, is positioned to expand custody for institutional crypto funds and ETFs under evolving U.S. banking guidelines. Coinbase, one of the largest dedicated crypto custody providers, offers custody, trading, and related services to institutional clients, including ETF sponsors. The company is well-established in crypto custody with deep integration into trading and staking services, making it a likely partner for many crypto ETFs.

In February, Citi and State Street first revealed plans to enter the crypto custody space. Now, Citi plans to enter the crypto exchange-traded funds market as a custody service provider, aiming to compete in a market currently dominated by U.S.-based crypto exchange Coinbase. The Securities and Exchange Commission approved the first spot crypto ETF with Bitcoin spot ETFs in 2024. Other issuers of spot Bitcoin ETFs include Fidelity Investments, Grayscale, Ark, 21Shares, and Bitwise. The total net assets in spot Bitcoin ETFs are over $158.6 billion, with the largest BTC ETF being the BlackRock iShares Bitcoin Trust with $91 billion in net assets.

In short, the crypto ETF custody service market is becoming more institutionalized and competitive. With Citigroup and Coinbase among the leading providers, both entities stand to benefit from evolving regulatory clarity and technology enabling secure and efficient custody solutions for crypto ETPs.

1. Increased regulatory scrutiny and operational innovations are driving changes in the market landscape for crypto exchange-traded funds (ETFs) custody services, with custody remaining a core concern for regulators.
2. The U.S. Securities and Exchange Commission (SEC) approved an "In-Kind Order" allowing authorized participants to perform in-kind creations and redemptions of Bitcoin and Ethereum ETFs, enhancing operational efficiency.
3. Major players in the crypto ETF custody services market include Citigroup, Coinbase, and other institutional custodians, with Citigroup planning to enter the crypto ETF market as a custody service provider to compete with Coinbase.
4. The SEC's "Project Crypto," launched in mid-2025, aims to modernize custody rules, enabling hybrid platforms combining crypto custody, trading, staking, and lending services, and streamlining regulatory compliance for market intermediaries.
5. The total net assets in spot Bitcoin ETFs are over $158.6 billion, with the largest BTC ETF being the BlackRock iShares Bitcoin Trust with $91 billion in net assets, highlighting the growing significance of these financial instruments in the crypto industry.

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