Citigroup (C) CEO Jane Fraser offered a clear stance on the future of digital finance, telling investors that tokenized deposits (not stablecoins) will be the main driver behind next-generation payments and financial market infrastructure.
Speaking on an investor call after the bank’s third-quarter earnings release on Tuesday, Fraser explained that institutional clients are asking for seamless, real-time, cross-border money movement that is low-cost and compliant.
“What our customers want are interoperable, multi-bank, always-on payment solutions, delivered in a secure and robust manner,” he said. “That is best achieved through tokenized deposits.”
Citi has invested heavily in digital asset infrastructure, including its own 24/7 US dollar clearing network. Fraser said the bank’s tokenized services can now link to more than 250 banks in more than 40 markets, allowing customers to instantly transfer funds to providers and third parties. However, he also noted that the biggest obstacle to broader adoption is not technical, but rather that many corporate treasury departments are not yet prepared for a 24/7 financial environment.
While Citi will continue to support stablecoins (offering on- and off-ramps, custody services and cash management for stablecoin providers), Fraser emphasized that they come with more operational frictions. That includes regulatory burdens around anti-money laundering (AML), tax reporting and accounting. “These other requirements are what prevent our tokenized deposit capabilities,” he said.
Fraser has previously said that Citi is exploring the possibility of issuing its own stablecoin, but warned against overhyping the asset class. “There is an over-focus on stablecoins right now,” he said. “Most of this will be solved by tokenized deposit capabilities.”
Looking ahead, Fraser sees tokenization expanding far beyond payments. He pointed to a future where the issuance and settlement of everything from oil to stocks takes place on tokenized rails in a regulated and trusted environment.
The key, he said, is that regulators are starting to allow responsible innovation.
“We will provide it as part of our toolkit,” Fraser said. “It’s great that regulators are now allowing us to innovate responsibly. That will really help the development of the market.”
