Citi Enables Stablecoin Payments for Corporate Clients via Coinbase Deal

Large firms that bank with Citigroup will soon accept stablecoin payments at checkout without handling crypto directly.

Stablecoins are digital tokens that maintain a one-to-one peg with the US dollar. Citi's new arrangement with Coinbase comes two weeks after a significant crypto bill fell apart in Washington over those same tokens.

How a Stablecoin Payment Becomes Cash at Citi

A customer pays a Citi corporate client using stablecoins. Coinbase, the largest US crypto exchange, processes the payment and converts it into dollars. Citi then settles the funds like any standard bank transfer, the Journal reported on Monday.

We're bringing stablecoins into the banking system with @Citi.

That means instant stablecoin acceptance for institutions – all on bank-grade, regulated infrastructure.

The next step for stablecoins becoming everyday money.

— Coinbase 🛡️ (@coinbase)

The merchant never holds any tokens.

The deal works in both directions. Coinbase's payments customers receive an account-style product through Citi that converts incoming cash into stablecoins. Those tokens remain at Coinbase and yield 3.75% annually.

That figure is where complications arise.

Why Banks Opposed Stablecoin Rewards in the Clarity Act

The Clarity Act, a bill designed to establish rules for US crypto markets, failed in the Senate on September 15. It lost a procedural vote 49-50, falling short of the 60 votes needed. A dispute over stablecoin rewards contributed to its defeat, the Journal reported.

A day before the vote, eight banking groups urged senators to prohibit such rewards. They argued that interest-bearing tokens could pull deposits away from banks.

“When deposits decline, it reduces the availability of credit that supports communities and pathways to upward mobility,” the groups wrote in their letter.

The Financial Services Forum was among the signatories. Its chair is Citi CEO Jane Fraser, according to the Forum.

Her lobby asked Congress to ban stablecoin rewards. Her bank now facilitates the banking infrastructure for a Coinbase product that offers such rewards.

Citi maintains that the Senate defeat has no impact on its plans.

“We are not hampered. We’re continuing to do what we do within the banking license we have, within the regulations we currently have,” Shahmir Khaliq, Citi’s head of services, told the Journal.

What Citi and Coinbase Have Not Said Yet

The report did not identify any merchants using the service or provide a launch date.

Citi is also launching its private blockchain for corporate cash movement in Japan and the United Arab Emirates. This is part of a broader push as banks move into stablecoins.