Introduction
Two weeks ago, Citi revealed its strategy for stablecoins and tokenised deposits on its earnings call, and it’s more than just another bank innovation headline. It’s a signpost for where the entire payments industry is heading.
Citi’s approach isn’t simply about launching a stablecoin to keep up with fintechs. It’s about using tokenised deposits to become the foundation for real-time, always-on, programmable payments. For anyone in payments, from PSPs to merchants to fintech innovators, this is a wake-up call.
Let’s unpack Citi’s strategy, understand the market forces that make it possible, and explore what this means for the future of programmable payments.
Citi’s “Genius” Move
On its earnings call, Citi’s CEO Jane Fraser outlined four pillars of their digital asset strategy,
- Ramps
- Converting fiat to crypto for clients, building an institutional-grade bridge to on-chain markets.
- Reserve Management
- Managing stablecoin reserves for customers and counterparties, effectively becoming a safe and regulated custodian for digital dollars.
- Tokenisation Services
- Already operating tokenised deposits in a closed loop, enabling 24/7 movement of funds between Citi’s global hubs with no pre-funding.
- A Consortium Stablecoin
- Hints of joining or co-creating a Zelle-like stablecoin consortium with other major banks like Bank of America and JPMorgan.
This strategy is being called “genius” because it positions Citi to own the infrastructure layer of future digital settlement, not just participate in it.
The Regulatory Unlock: Why Now?
Citi’s timing is not accidental. Fraser herself called out enthusiasm for the so-called “Genius Act” (properly the Clarity for Payment Stablecoins Act in the US), which aims to regulate stablecoin issuance in a way that favours banks.
After years of regulatory uncertainty, which companies like Circle fought hard to clarify, banks now have a green light to enter the space with clarity and confidence.
In other words, while crypto-native firms laid the groundwork, regulated banks are poised to dominate the next phase.
This dynamic is important. It suggests that the tokenised settlement layer for future payments won’t be a fragmented Wild West. Instead, it will be regulated, bank-owned, and integrated with existing infrastructure.
Tokenised Deposits: The Real Off-Ramp
The really insightful part of Citi’s plan isn’t just launching a stablecoin, that’s table stakes at this point. It’s that they’re prioritising tokenised deposits.
Why? Because tokenised deposits are the real off-ramp for everything else.
- A stablecoin is a digital representation of money, but it still needs to settle somewhere.
- Tokenised deposits are bank deposits represented on-chain, redeemable 1:1, backed by the bank.
- They allow for instant, 24/7, programmable settlement without credit risk.
Jane Fraser described their tokenised deposit product as already live in a closed loop between Citi hubs. This is not speculative, it’s operational.
As stablecoins, tokenised securities, on-chain FX, and other digital assets scale, tokenised deposits become the default settlement layer.
It’s a future where payment, FX, and securities settlement converge on a single programmable, always-on infrastructure.
Implications for the Payments Industry
This shift has far-reaching consequences. Here are a few worth calling out,
1.
Banks Reclaim the Rails
For years, fintechs, payment processors, and crypto startups built alternative rails that bypassed banks. Stablecoins like USDC and Tether dominated on-chain settlement. Cross-border fintechs used wallet-based or peer networks to cut costs.
Tokenised deposits allow banks to reclaim these flows,
- They settle instantly 24/7, just like stablecoins.
- They remove the counterparty risk of unregulated issuers.
- They keep funds inside the banking system.
Banks effectively get all the benefits of crypto rails without ceding control.
2.
FX Markets Go On-Chain
One of the most overlooked insights from Citi’s announcement is the transformative effect on FX markets.
- A tokenised deposit in GBP and one in USD can swap instantly on-chain.
- No pre-funding, nostro accounts, or daylight settlement risk.
- This opens the door to 24/7, global, instant FX markets, even for exotic pairs.
For emerging markets and the global South, this could reduce costs and increase access dramatically.
Citi is positioning to intermediate and profit from this flow.
3.
Programmable Payments Become Infrastructure
Perhaps most importantly, tokenised deposits are inherently programmable.
You don’t just move money faster, you define when, why, and under what conditions it moves.
- Pay-on-delivery for e-commerce without intermediaries.
- Usage-based billing that charges per mile driven, or per megabyte consumed.
- Real-time, multi-party settlement in insurance, trade finance, or travel bookings.
Citi’s move signals that programmable payments aren’t a niche innovation. They’re becoming the default settlement layer of the global economy.
Why Programmable Payments Matter Now
At Raimac, we’ve argued for years that programmable payments represent the next evolution of financial infrastructure.
Traditional payment systems are slow, opaque, and rigid. They depend on batch processing, pre-funding, and manual reconciliation. That creates cost, risk, and customer frustration.
Programmable payments turn settlement into code,
- Automating conditional transfers.
- Reducing risk through escrow-like logic.
- Creating transparency and trust.
Citi’s plan validates this thesis at a global, bank-led scale. It shows that major financial institutions see programmable payments not as a niche fintech product, but as the foundation of their strategy for the next decade.
What This Means for Raimac
While Citi focuses on large corporate flows and interbank settlement, the principles are identical for SME merchants, PSPs, and local authorities.
- Local councils offering repayment plans for parking fines or council tax can use programmable payments to align payments to citizen income cycles.
- Utility companies can offer smart instalments that adapt to changing energy use or affordability.
- PSPs can embed programmable payment links directly into merchant checkout flows, offering flexibility without introducing credit risk.
The same logic, settlement as code, trustless conditionality, 24/7 clearing, drives value at every level.
As programmable payments become standard infrastructure, innovators like Raimac have a huge opportunity to deliver these capabilities to smaller players who don’t have Citi’s scale, but have the same need for trust, flexibility, and cost reduction.
Conclusion: A Turning Point for Payments
Citi’s stablecoin strategy is more than a headline. It’s a signal of structural change in how money moves.
By embracing tokenised deposits as the settlement layer, banks are moving payments into an always-on, programmable future.
For the wider industry, it’s a challenge and an invitation. Innovators who adapt will thrive in a world where payment is no longer just a cost centre but a source of competitive advantage, customer trust, and operational resilience.
At Raimac, we’re ready to help build that future, one programmable payment at a time.
