Citigroup Shuts Down Plan to Launch JPM Coin-Like Bank-Backed Crypto

Following the splash JPMorgan created recently after revealing its plan to introduce a bank-backed crypto, another big institution had initially tested a token to link global payments in 2015.

Dubbed “Citicoin,” the Dublin based Citigroup innovation formally announced its plans by the bank, as a proof of concept. It is understood that the motive behind this was to streamline the global payment process. Hence, there are obvious parallels to draw with the JP Morgan Coin.

Bitcoin (BTC) Price Today – BTC / USD

Name Price24H (%)
Bitcoin (BTC)
$10,597.00
9.24%

Citi Looking Into Effective Short Term Impact Models to Facilitate Cross-border Payments

However, having considered what’s involved in the experiment (considering the scorn of the BTC community at the time), Citi reached a conclusion that, while the technology boosts the potential to meet the standards it set out to accomplish, there were a few other more effective ways of improving payments.

This is the view of Citi’s innovation lab head, Gulru Atak. Atak is the global head of innovation for trade solutions and treasury.

Considering all that’s involved, Atak had this to  say, regarding improving cross-border payments:

The bank is looking into implementing effective methods with a short-term impact. The company’s Blockchain strategy has been looking for ways to integrate legacy models. Examples include Citi’s 2017 partnership with Nasdaq. It was designed to streamline payments relating to private securities.” According to Atak, the project, also has similarities with JPM Coin.

From Trade Finance to FX

While Atak happily reflected on former Blockchain initiatives, she pointed out that Citi continues to explore Blockchain. Especially in the trade finance sector.

This niche is more realistic. Atak said, because creating an ecosystem for the trade finance sector doesn’t require large number of banks compared to a full-blown cross-border transactions system. In her words:

“Our focus is in the trade space. Trade trade and finance letters of credit. We are experimenting with the tech but probably we are reserved when it comes to giving bold announcements to the public.”

HSBC is a major banking rival of Citi. Back in January of this year, HSBC announced it settled in $250 billion of foreign exchange (FX) trades with a Blockchain through the last year.

Regarding FX, the Blockchain lead from Citi’s Innovation Lab, Opeyemi Olomo, said there are direct pain points in the market, which indicates that there are issues around credit transparency. Regarding global payments, the question of whether or not to apply Blockchain relates to how tedious the process would become as well as its benefit.

The Question of Custody

Since Citi remains one of the large custodians in financial instruments, it is only normal to ask if the institution is looking into the opportunities to adequately safeguard digital assets. This is an activity that has drawn plenty of interest from other incumbent institutions in recent times.

Broadly speaking, the Citi Chief said more and more industries are pushing harder and harder to move their existing instruments to a Blockchain backed platform without necessarily considering why that instrument exists from the onset.

According to Atak, having a close examination of the nature of the financial instruments may eventually be required.

 

 

Brian Lubin is a Crypto News Reporter for Smartereum. He's well-known for his reports on the crypto markets.

LEAVE A REPLY

Please enter your comment!
Please enter your name here

This site uses Akismet to reduce spam. Learn how your comment data is processed.