Citi Backs Stablecoin Firm BVNK Despite Previously Opposing Crypto Payment Rails

Citigroup invested in stablecoin infrastructure company BVNK through its venture capital arm Citi Ventures, which is a sharp reversal from the bank’s previous warnings about deposit flight risks from yield-bearing stablecoins. BVNK’s core technology operates as a payments rail facilitating global stablecoin transactions, allowing customers to move money between fiat and ￰1￱ Regulatory Clarity Drives Stablecoin Infrastructure Growth According to CNBC , the company declined to disclose Citi’s investment amount or its current valuation. However, co-founder Chris Harmse confirmed the valuation exceeds the $750 million publicly disclosed at its last funding round.

BVNK, also backed by Coinbase and Tiger Global, operates in a highly competitive space alongside newcomers like Alchemy Pay and TripleA, as well as established players like Ripple vying for the cross-border digital money ￰2￱ said the company is experiencing momentum, particularly in the United States, which has been its fastest-growing market over the past 12 to 18 months following the passage of the GENIUS Act earlier this ￰3￱ legislation established regulatory clarity for the stablecoin market, creating what the industry views as a more favorable ￰4￱ investment comes as CEO Jane Fraser confirmed in July that Citigroup is considering issuing its own stablecoin and developing custodian services for crypto ￰5￱ said the bank aims to deliver “ the benefits of advancements in stablecoin and digital assets to our clients in a safe and sound manner by modernizing our own infrastructure. ” Banking Industry Split Over Stablecoin Competition The backing arrives just months after Citigroup analyst Ronit Ghose warned in August that stablecoin interest payments could trigger 1980s-style deposit flight from traditional ￰6￱ drew parallels to the late 1970s and early 1980s when money market funds skyrocketed from $4 billion to $235 billion in seven years, draining deposits from banks whose deposit rates were tightly ￰7￱ ￰8￱ groups, including the American Bankers Association and Bank Policy Institute, lobbied Congress to close what they called a “loophole” in the GENIUS Act allowing crypto exchanges and affiliated businesses to offer yields on third-party ￰9￱ groups cited Treasury estimates suggesting yield-bearing stablecoins could result in up to $6.6 trillion in deposit outflows, fundamentally changing how banks fund loans.

However, crypto industry groups pushed back against these ￰10￱ Chief Legal Officer Paul Grewal dismissed the banking lobby’s efforts, calling it an “ unrestrained effort to avoid competition .” This was no loophole and you know it. 376 Democrats and Republicans in the House and Senate rejected your unrestrained effort to avoid ￰11￱ did one President. It's time to move on. ￰0￱ — ￰12￱ (@iampaulgrewal) August 13, 2025 At the same time, the Crypto Council for Innovation argued that restricting stablecoin yields would “tilt the playing field in favour of legacy institutions” and stifle consumer ￰13￱ last month, Coinbase research found no meaningful correlation between stablecoin adoption and deposit flight for community banks over the past five ￰14￱ apparent contradiction between Ghose’s warnings and Citi’s investment might have resulted from the simultaneous fear and embrace of stablecoin ￰15￱ emphasized during the bank’s July earnings call that “ digital assets are the next evolution in the broader digitization of payments, financing, and liquidity ” and that the bank’s focus remains on meeting client ￰16￱ Street Accelerates Digital Asset Integration JPMorgan Chase also launched its own stablecoin-like token called JPMD this year, after earlier allowing clients to buy ￰17￱ of New York Mellon is already testing tokenized deposits , while HSBC has also launched a tokenized deposit service, as traditional financial institutions race to integrate blockchain ￰18￱ the last 30 days alone, stablecoins processed over $5 trillion in transactions, according to Visa , while total stablecoin market capitalization has exceeded $300 billion per DefiLlama data.) August 18, 2025 For this latest backing, Harmse said BVNK has “ dipped in and out of profitability ” as the company invested in growth, but is on track to be profitable next ￰19￱ noted that “ ￰20￱ at the scale of Citi, because of the GENIUS Act, are putting their weight behind investing in leading businesses in the space to make sure they are at forefront of this technological shift in payments. “