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Citigroup Inc., an American multinational investment corporation, is reportedly assessing its collaboration with Metaco. The Swiss company, which focuses on crypto custody services for institutional investors, partnered with Citi a year ago to enhance and test the latter’s digital asset custody capabilities.
This recent development arises amid challenging market conditions that have considerably impacted the relationships of traditional financial institutions involved in the digital assets sector.
Challenges in Citi and Metaco’s Partnership?
As per sources cited by Bloomberg who are knowledgeable about the situation, both Citi and Metaco have initiated informal discussions with alternative providers. However, these discussions are confidential, and the sources have opted to remain unnamed.
The rationale behind this decision has not been disclosed, as a representative from Citi declined to provide comments. The current wave of uncertainty affecting the crypto sector has led several of its banking partners to either collapse or withdraw from associations with crypto firms.
The report highlighted instances such as the newly launched platform EDX Markets, a crypto exchange supported by companies including Citadel Securities, Fidelity Digital Assets, and Charles Schwab Corp., which abandoned its plan to utilize Paxos as a custodian.
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In a similar vein, banking giant State Street Corp. also terminated its licensing agreement with crypto custody provider Copper last month, effectively winding down its enterprise infrastructure operations aimed at connecting banks and hedge funds with digital assets. Copper’s partnership with State Street had been in place for over a year since its inception last March.
Is Ripple’s Partnership a Factor?
Last month, blockchain company Ripple announced its intention to invest $250 million to acquire Metaco, aiming to broaden its services to allow customers to custody their digital assets with its upcoming product offerings. In response to this development, Metaco Founder and CEO Adrien Treccani stated that the acquisition would enable the Swiss firm to expand its market presence.
However, with Ripple currently involved in a protracted legal battle with the US Securities and Exchange Commission (SEC) and custody issues becoming a contentious topic within the crypto industry, Citi’s choice to reevaluate the partnership, which has been established since last summer, seems concerning.
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