The news: Citi is partnering with Coinbase to build stablecoin payment capabilities for institutional clients. The partnership will focus initially on crypto on- and off-ramps, which enable clients to convert between digital assets and fiat currencies.

More on this: Large banks have dabbled in stablecoins and blockchain-based settlement instruments for years. For example, JPMorgan introduced its JPM Coin in 2019 to settle transactions between clients of its wholesale payments business segment. Société Générale launched a euro-denominated stablecoin in 2023, and Standard Chartered formed a joint vendor to issue a Hong Kong dollar–based stablecoin.

The backdrop: The first major federal cryptocurrency legislation, the GENIUS Act, was signed into law in July. It addresses the legal basis for stablecoins by defining issuer eligibility and establishing oversight requirements. The law is favorable to the financial services industry, providing banks with the resources to comfortably move forward with stablecoin issuance and custody.

Our take: The deal between Citi and Coinbase continues to normalize blockchain infrastructure and speed up the acceptance of stablecoins for institutional money movement. The idea that crypto could replace fiat currency has already faded; with the regulatory risk reduced, the logical approach for banks has turned from caution to adoption

It’s unlikely that many banks will build their own integrations with crypto rails. But with infrastructure partnerships, native on- and off-ramps should become more common. Cryptocurrencies and blockchain infrastructure will be increasingly complementary to the traditional financial system.