According to Bloomberg, Citigroup is renegotiating its digital asset custody deal with Metaco; informal negotiations are underway with other providers.
According to Bloomberg sources familiar with the matter, both Citi and Metaco have begun informal negotiations with other providers. However, the discussions are private, so the sources chose to remain anonymous. The reason for this decision has not yet been disclosed, and a Citi spokesman declined to comment.
Metaco, a Swiss financial technology company that Ripple bought in May for $250 million. Citigroup, an American investment bank, partnered with Metaco in 2022, about a year before Ripple acquired the company.
Ripple Labs bought Metaco at a difficult time, in the midst of a bear market when bitcoin fell lower $28,000. Moreover, the Ripple vs. SEC case damages the company’s business ties and distribution of the XRP Ledger. Amid the scandal, Ripple sought to strengthen your market presence through investment.
When Ripple CEO Brad Garlinghouse said the company had nearly $1 billion in reserves to use for expansion projects, the payment company bought Bitstamp shares formerly held by American investment firm Pantera Capital.
This was part of a growth strategy to reach customers other than those looking for payment services. Specifically, Ripple Labs wants to offer its customers tokenization, payments, and storage capabilities for every asset.
At the time of publication, it is not certain that Citigroup’s repricing of the Metaco deal has anything to do with Ripple. In addition, there has been a recent trend of banks exiting or abandoning crypto firms.
The report provides examples such as the recently launched platform EDX Markets, a cryptocurrency exchange backed by firms such as Citadel Securities, Fidelity Digital Assets and Charles Schwab Corp., which has abandoned its plan to use Paxos as a custodian.
Similarly, banking giant State Street Corp. last month also ended a licensing agreement with custodial company Copper, thereby winding down its enterprise infrastructure business to link banks and hedge funds to digital assets. Copper’s association with State Street has lasted over a year since its partnerships in March last year.