Citi Executive: Clients Began With Bitcoin and Went ‘Down the Rabbit Hole’

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According to Itay Tuchman, Citi bank’s global head of foreign exchange, institutional investors who turned to Bitcoin during the pandemic quickly became interested in the broader crypto industry.

“It was almost instantaneously a narrative about investing in crypto ecology, and decentralized networks and different kinds of financial architecture in the future; [it] became a technology—an innovation-investment conversation—in a matter of seconds,” said Tuchman, who spoke about the intersection of crypto and “tradfi” at the Token2049 conference in London on Friday.

“Like anyone who’s in crypto knows, you start with Bitcoin and you’re down the rabbit hole very quickly,” he added.

Citi was named the World’s Best Foreign Exchange Bank by Global Finance magazine in November last year. It has tens of thousands of institutional investors on its books.

Tuchman told the Financial Times in May that Citi is considering offering cryptocurrency trading, financing, and custody services.

When asked what was preventing institutional investors from moving from a passive interest in cryptocurrency to actively trading it, Tuchman cited regulation and concerns about risk and compliance.

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“We’re not Tesla,” said Tuchman. “We’re not in the business of inventing things that customers will want in the future.” Banks, he said, “stand for safety and soundness.”

He pointed out that in tradfi, a single FX outage that had any meaningful impact on clients “is a regulatory event; it’s an event that incurs a ton of governance.”

In contrast, in decentralized finance, an outage is generally fixed within hours, and generates a host of open source code, encouraging further innovation.

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Customers, on the other hand, expect a lot of help from their bank, according to Tuchman. “In order for us to add value to our customer base, we must add value in an environment that meets the safety and soundness standards that we would expect.”

Despite all of their talk about cryptocurrency, it’s worth noting that no bank has its own [crypto] custodian—yet. Despite the fact that this is what their clients request, according to Tuchman.

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