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Institutional investors, who turned to Bitcoin during the pandemic quickly became interested in the wider crypto industry, according to Itay Tuchman, Citi bankâs global head of foreign exchange.
âIt 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 technologyâan innovation-investment conversationâin a matter of seconds,â said Tuchman, who spoke about the intersection of crypto and âtradfiâ at the Token2049 conference in London on Friday.Â
âLike anyone whoâs in crypto knows, you start with Bitcoin and youâre down the rabbit hole very quickly,â he added.Â
Citi was named the Worldâs Best Foreign Exchange Bank by Global Finance magazine in November last year. It has tens of thousands of institutional investors on its books.Â
Last May, Tuchman told the Financial Times that Citi is considering launching crypto trading, financing, and custody services.Â
Asked what was holding institutional investors back from moving from passive curiosity about crypto to actively trading it, Tuchman pointed to regulation, and concerns over risk and compliance.
âWeâre not Tesla,â said Tuchman. âWeâre not in the business of inventing things that customers will want in the future.â Banks, he said, âstand for safety and soundness.âÂ
He pointed out that in tradfi, a single FX outage that had any meaningful impact on clients âis a regulatory event; itâs an event that incurs a ton of governance.âÂ
In contrast, in decentralized finance, an outage is generally fixed within hours, and generates a host of open source code, encouraging further innovation.Â
But a bankâs customers expect considerable hand-holding, said Tuchman. âIn order for us to add value to our customer base, we have to add value in an environment that has the standards that we would expect from safety and soundness.â
Despite all their banter about crypto, itâs notable that no bank has its own [crypto] custodianâyet. Even though this, said Tuchman, is what their clients ask for.
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