Citigroup proposes that the wide adoption of stablecoins and artificial intelligence will transform post-trade operations by accelerating settlements and reducing costs. The bank’s report examines tokenized money, custody services for crypto ETFs and forecasts substantial growth in stablecoins that could force traditional banks to reconsider their roles.
Citi’s Forecast and Strategic Focus
Citi anticipates a sharp increase in USD-backed stablecoins and is exploring their use in payments, custody services and DLT infrastructure for near-instant settlements. The institution highlights tokenization of assets and custody for crypto products as central strategic areas where technical development and market demand are likely to converge over the next decade.
Tokenization, DLT and Operational Efficiency
Tokenization combined with distributed ledger technology and AI can reduce operational delays, simplify reconciliations and shorten settlement times through automation and smart-contract-based processes. These technologies promise lower back-office costs and faster processing by automating post-trade steps and enabling real-time or near-real-time finality of transactions.
Risks: Disintermediation and AI Challenges
The attractiveness of tokenized instruments and higher yields in digital options poses a real risk of bank disintermediation, pressuring traditional liquidity and business models. At the same time, embedding AI in critical workflows raises governance, transparency and security challenges, including model biases, failures and vulnerability to attacks that demand robust controls and oversight.
Interoperability and Financial Access
Interoperability between stablecoins and tokenized infrastructures can ease cross-border frictions and broaden access to financial services beyond traditional banking systems. For this potential to materialize, operational decentralization must be preserved and infrastructure concentration among a few custodians avoided to protect users’ and developers’ financial independence and reduce single points of failure.
Regulatory and Industry Coordination
An orderly transition requires cooperation among banks, regulators and crypto actors to ensure liquidity and consumer protection without stifling innovation. Clear regulatory frameworks for issuers, custodians and infrastructure providers, together with strict AI governance, are presented as prerequisites for a stable and resilient evolution of post-trade ecosystems.
Stablecoins and AI have the potential to redefine post-trade operations by enabling faster settlements, lower costs and new business models while introducing regulatory and stability challenges. The ultimate outcome will depend on balancing innovation with governance and consumer protection to determine whether the shift leads to a more open, independent financial infrastructure or reinforces traditional intermediaries.
