Benzinga - Citigroup Inc. (NYSE: C) is reportedly reassessing its digital asset custody partnership with Metaco, a Swiss fintech firm, and has initiated informal discussions with alternative providers.
Citigroup made its partnership with Metaco public last year.
Recently, Metaco was purchased by Ripple Labs Inc. (CRYPTO: XRP) for $250 million.
Ripple Labs is currently embroiled in an ongoing legal battle with the U.S. Securities and Exchange Commission (SEC).The digital assets space has seen an influx of conventional financial institutions, which has opened doors for emerging startups, especially in the area of custody.
There is no clarity on whether Citigroup's reevaluation is connected to Ripple's acquisition of Metaco, Bloomberg reported.
Ripple, at the time of the acquisition, stated that Metaco would continue to function as an autonomous brand under the leadership of its CEO, Adrien Treccani.
In a related development, EDX Markets, a crypto exchange that recently commenced operations with the backing of companies such as Citadel Securities, Fidelity Digital Assets, and Charles Schwab Corp., has abandoned its intention to utilize Paxos as a custodian.
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Crypto custody has garnered attention in the cryptocurrency industry following the collapse of several notable firms last year.
This included FTX (CRYPTO: FTT), led by Sam Bankman-Fried, which left numerous investors unable to access their assets.
Ripple, which is based in San Francisco, has projected that the market for crypto custody services for institutional clients could approach $10 trillion by 2030.
The acquisition of Metaco by Ripple is aligned with Ripple's aspiration to diversify beyond payments, affording clients the capabilities to tokenize, settle, and custody a variety of assets.
Tokenization involves the creation of digital analogs of assets through blockchain technology.
When Citigroup announced its partnership with Metaco in June of the previous year, it mentioned that both entities would explore methods to custody assets akin to traditional securities.
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