Citi and Coinbase Tie Stablecoin Payments to Global Bank Accounts

Citi and Coinbase have announced an expanded partnership that ties stablecoin payments to accounts at a global bank. This means two new products are being launched in the United States: Coinbase Virtual Accounts, which run on Citi's Virtual Account Wallet, and Spring by Citi, a payments platform for institutional clients.

Coinbase Virtual Accounts work like this: when money is sent to an account identifier assigned to a customer, it is automatically converted into a stablecoin, which is held in custody by Coinbase. This allows for fast and global transactions without the need for banking days.

The second product, Spring by Citi, enables institutional clients to accept stablecoins as payment, with Coinbase handling the conversion into commercial bank money in the background. Citi is responsible for credit and settlement, and the recipient ends up with a dollar credit in their account.

This partnership says more about the risk appetite of large banks than any declaration of intent, according to Ledger Insights. A Coinbase subsidiary has preliminary approval for a federal trust company charter but lacks an account at the Federal Reserve, making it necessary for them to partner with a bank like Citi to access the payment system.