Global banking giants State Street and Citi are gearing up to introduce Bitcoin and cryptocurrency custody services in 2025. The move is driven by anticipated regulatory changes that could reshape how major financial institutions handle digital assets. Their deep experience in crypto custody and blockchain-based financial solutions positions them to take a significant step into the evolving landscape of institutional crypto adoption.
Regulatory Green Light Sparks Action
State Street and Citi’s decision to move into crypto custody isn’t just about expanding services—it’s about adapting to a shifting regulatory environment. The Office of the Comptroller of the Currency (OCC) is expected to introduce clearer guidelines, allowing national banks to legally and securely store and manage digital assets.
State Street is no stranger to crypto innovation. It has already worked with Taurus, a specialist in Bitcoin custody and asset tokenization, to develop digital asset solutions. Citi, meanwhile, has steadily expanded its blockchain research and digital asset strategies, signaling a long-term commitment to the sector.
The OCC’s expected regulatory framework could provide much-needed clarity, reducing uncertainty for banks and encouraging institutional investors to enter the crypto space with greater confidence.
Challenges Banks Face with Crypto Custody
While the opportunity is huge, banks are still grappling with major hurdles in offering digital asset custody services.
- High compliance costs: The Staff Accounting Bulletin 121 (SAB 121) from the Securities and Exchange Commission (SEC) makes crypto custody an expensive venture for banks.
- Unclear risk management frameworks: Handling digital assets requires an entirely new risk assessment model compared to traditional securities.
- Constantly changing regulations: Crypto laws and policies are still evolving, meaning banks have to remain flexible while ensuring full compliance.
However, banks might soon get some relief. The SEC is considering adjustments to SAB 121, which could lower costs and make custody services more feasible for large institutions like Citi and State Street.
What It Means for the Crypto Ecosystem
Bringing State Street and Citi into the digital asset custody game could have profound effects on cryptocurrency adoption and market stability.
- Increased Institutional Investment: Traditional financial institutions offering custody services could eliminate some of the trust issues that big investors have about crypto. More capital could flow into Bitcoin and other digital assets as a result.
- New Financial Products: Banks integrating crypto custody could spur innovative financial products that bridge traditional finance and digital assets. Think tokenized funds, hybrid investment vehicles, and blockchain-powered financial services.
- Global Ripple Effect: As two of the largest banks in the world make moves in crypto, other financial institutions—both in the U.S. and internationally—could feel pressure to follow suit. This could accelerate global adoption of digital assets.
Regulatory Uncertainty Still Looms
Despite the optimism, it’s far from a smooth ride. Crypto regulations remain unpredictable, and governments worldwide are still debating how to classify, tax, and regulate digital assets.
For Citi and State Street, staying ahead of compliance requirements will be as crucial as the technology itself. Any major regulatory roadblocks could delay or alter their plans.
Even so, 2025 could mark a turning point. If U.S. regulators provide clear rules and major banks officially enter the crypto space, it might be the beginning of mainstream institutional adoption of digital assets.
