Citi warned that stablecoins could drain banks, and now supports the technology.

Citigroup invested in stablecoin infrastructure provider BVNK through Citi Ventures, just months after warnings that cryptocurrencies could drain deposits from traditional banks.

BVNK’s platform acts as an on-ramp and off-ramp for customers to move funds between fiat and cryptocurrencies. It is also supported by US cryptocurrency exchange Coinbase and fund manager Tiger Global Management.

This investment highlights TradFi’s shift from caution to participation in the stablecoin ecosystem after the US GENIUS Act provided regulatory clarity on their status.

BVNK valuation exceeds $750 million after Citi investment

teaThe company declined to disclose the amount or value of Citi’s investment. but Co-founder Chris Harmse confirmed that the latest investment brings its valuation significantly higher than the $750 million it disclosed in its most recent funding round.

BVNK is currently entering a competitive market with newcomers such as Alchemy Pay, TripleA, and even the well-known Ripple. These companies are all competing for the largest share of the cross-border digital currency market.

Amid fierce competition, BVNK has become less profitable as it invests in growth, but the company is experiencing momentum, especially in the U.S., Harmse said.

The co-founder added that the US has been the company’s strongest growth market over the past 12-18 months. This growth has been fueled by the approval of the GENIUS Stablecoin Act, which was signed into law by US President Donald Trump earlier this year.

Last August, U.S. Treasury Secretary Scott Bessent expressed support for stablecoin adoption, saying the tokens would “expand access to dollars for billions of people around the world.”

Enforcing the GENIUS Act is essential to ensuring America’s leadership in digital assets.

Stablecoins will expand access to billions of dollars around the world and lead to a surge in demand for the U.S. Treasury bonds that back them.

It’s a win-win-win for everyone involved… https://t.co/p5nRQpBfnw

— Treasury Secretary Scott Bessent (@SecScottBessent) August 18, 2025

The regulatory clarity provided by the GENIUS Act has facilitated the capitalization of the stablecoin market in recent months, and several financial institutions have since signaled plans to launch their own stablecoins.

Last week, the market capitalization of the stablecoin sector surged to approximately $4.353 billion. DefiLlama data.

Thanks to growth over the past seven days, the stablecoin market capitalization now exceeds $304.163 billion.

Stablecoin market capitalization (Source: DefiLlama)

In the past 30 days alone, stablecoin transactions reportedly reached $5 trillion. On-chain analysis From visa.

One company that has confirmed stablecoin plans is Citi, with CEO Jane Fraser saying the bank is considering issuing its own stablecoin after the GENIUS Act was signed into law in July. She also said Citigroup is developing custody services for cryptocurrency assets.

With these products, Citi aims to modernize its infrastructure to securely deliver “the benefits of stablecoins and digital asset advancements” to its customers.

Other companies are also exploring blockchain technology and tokenization. This includes Wall Street giant JPMorgan Chase, which launched its own stablecoin-like token called JPMD. Meanwhile, Bank of New York Mellon said it is testing tokenized deposits. HSBC has also launched its own tokenized deposit service.

Citi warned of a risk of deposit flight similar to the 1980s.

Citi’s investment in BVNK comes after one of its analysts, Ronit Ghose, warned in August that the growing interest in stablecoin payments poses a deposit flight risk to traditional banks similar to what money market funds saw in the 1980s.It increased from $4 billion to $235 billion in 7 years.

Major U.S. banking groups have already expressed concerns about high-yielding stablecoins and lobbied Congress to address what they called a “loophole” in the GENIUS Act.

The law prohibits stablecoin issuers from providing returns directly to token holders, but does not extend this prohibition to third parties or affiliates. According to the banking group, this opens the door for stablecoin issuers to avoid the restrictions. For example, Coinbase is currently offering users yield on Circle’s USD Coin (USDC) stablecoin.

If these “loopholes” remain unresolved, the banking group predicts they could result in deposit outflows of up to $6.6 trillion from the traditional banking system. That could fundamentally change the way banks fund loans.

However, the cryptocurrency industry has pushed back against the banking group’s claims, with many dismissing them as merely an effort by banks to stifle competition. Some, including Stripe CEO Patrick Collison, have said that stablecoins will now force banks to offer higher yields to their customers.

Good post about the evolving stablecoin market structure. I would like to expand on this further. Yes, I think stablecoin issuers should share returns with others, but this is just one example. Everyone will have to share in the harvest. Today’s average interest on savings in the U.S.… https://t.co/yjjLOzxoOk

— Patrick Collison (@patrickc) October 3, 2025

Related articles:

Best Wallet – Diversify your cryptocurrency portfolio

• Easy to use and highly functional cryptocurrency wallet
• Get early access to the upcoming token ICO
• Multi-chain, multi-wallet, non-custodial
• Now available on App Store and Google Play
• Stake to win native token $BEST
• 250,000+ monthly active users