Citi Ties Stablecoin Payments to Coinbase
Citi lets business customers accept and convert stablecoins to dollars through Coinbase. Meanwhile, the debate over rewards and bank deposits in Washington remains stuck.
Key Takeaways
- Citi lets business customers accept stablecoin payments through Coinbase, while they do not have to hold crypto themselves.
- Coinbase converts the payment into dollars; in the other direction, customers can have money converted into stablecoins with a 3.75% annual reward.
- The setup comes as U.S. stablecoin rules remain unclear and banks worry about possible deposit outflows.
Citigroup is going to let business customers accept stablecoin payments through Coinbase, without having to handle crypto themselves. The move shows how banks and crypto companies are working more closely together around payments, while Washington is still debating the rules for stablecoins and the rewards tied to them.
How the Payment Works
According to the Journal, a customer can pay a Citi customer in stablecoins. Coinbase receives the payment, converts the tokens into dollars, and Citi then processes the money like a regular bank transfer. So the merchant does not hold any tokens.
The setup works the other way too. Through Citi, Coinbase customers get an account-like product that converts incoming money into stablecoins. Those tokens stay with Coinbase and earn a reward of 3.75% per year.
That last point is politically sensitive. Stablecoins are digital tokens tied to the U.S. dollar, and it was exactly around those rewards that the debate over the Clarity Act got stuck earlier this year. Banks are also looking for ways to plug stablecoins into existing payment flows; SoFi already did that earlier with a card program that settles through a stablecoin.
Banks Fear Deposit Losses
The Clarity Act, meant to set rules for the U.S. crypto market, did not make it through the Senate on September 15. The proposal lost a procedural vote 49 to 50 and needed 60 votes. A fight over stablecoin rewards played a big role in that, the Journal reported.
A day before that vote, eight banking groups asked senators to ban those rewards. They warned that interest-like tokens could pull deposits away from banks and hurt lending. The Financial Services Forum, chaired by Citi CEO Jane Fraser, also signed onto that call.
Citi says the failed vote does not change its own plans. Shahmir Khaliq, Citi’s head of services, told the Journal that the bank will keep going under its existing banking license and the rules that are in place now.
Why This Matters
For European crypto readers, this matters mainly because it shows how stablecoins are being built into existing payment flows more and more often. Not just crypto exchanges, but also big banks are looking for ways to move dollars faster without customers having to deal with tokens directly.
The partnership also fits a broader trend where banks are trying to redefine their position toward stablecoins. At the same time, U.S. regulation is still unclear, which means products like this are still heavily dependent on the room banks and crypto companies see within the current rules.
