Big Banks Bet on Bitcoin as State Street & Citi Bank Enter Crypto Custody

• Large U.S. banks like State Street and Citi are entering crypto custody, a strong institutional interest in digital assets.
• Regulatory shifts and 2024 Bitcoin ETFs are fueling institutional onboarding, with banks rolling out crypto custody solutions.
• Banks such as Citigroup and BNY Mellon are incorporating blockchain solutions, an indication of increasing faith in digital asset markets.

Big U.S. banks are entering digital assets. State Street and Citi Bank will launch crypto custody services, showcasing growing institutional appetite for blockchain technology.

Institutional Interest in Crypto Is Growing

Large U.S. institutions are getting into the market for digital assets, which is becoming highly popular. One major step in the direction of institutional investment has been the impending entry of Citi Bank and State Street in the Bitcoin custody business. The action comes after the Federal Reserve nod that allows banks to freely decide their cryptocurrency strategy. Therefore, Banks are getting into the market for custody of digital assets.

In addition to State Street and Citi Bank, other banks are also venturing into the crypto custody market. Several American organizations , including Standard Chartered and BNY Mellon, are also developing digital asset solutions. BNY Mellon was recently granted regulatory permission to hold more digital assets beyond just Bitcoin and Ethereum ETFs. As the industry’s confidence in blockchain technology grew, HSBC revealed plans for an institutional-grade custody system.

Bitcoin Magazine recently covered the increasing participation of traditional banks in digital asset management, pointing out how financial institutions are evolving with shifting market trends. Ever since spot Ethereum and Bitcoin ETFs arrived in 2024, institutional utilization has also increased manifold. These ETFs have seen huge inflows since they were launched, demonstrating investors’ appetite. The increased interest of the financial market in cryptocurrencies indicates their long-term prospects.

Market Sentiment and Stock Performance

With a 4.9% gain in the most recent month, State Street’s stock has increased 38% over the last 12 months. In a similar way, Citigroup’s stock has increased by 46% so far this year, including 14% in the last month. Nevertheless, investor excitement is low, and retail mood is neutral despite the market’s impressive gain.

Furthermore, Citigroup has been exploring digital asset services through its CIDAP platform. The initiative offers crypto-safeguarding solutions for institutional clients. Additionally, the bank is testing a pilot program focused on tokenizing private markets. These developments reflect banks’ long-term commitment to blockchain integration.

Regulatory Shifts Fuel Institutional Adoption

Regulatory changes under President Donald Trump’s administration have encouraged banks to explore crypto solutions. His administration has pushed for clearer digital asset regulations, fostering optimism among financial institutions. The Federal Reserve’s repeal of an accounting rule has eliminated barriers for banks engaging with digital assets.

Additionally, traditional financial giants recognize the potential of blockchain technology. State Street’s Chief Business Officer, Anna Paglia, has emphasized that digital assets can transform financial markets. As a result, more banks are expected to enter the crypto custody space.