American multinational investment giant – Citigroup Inc. – is reportedly reviewing its partnership with Metaco. The Swiss firm, which specializes in crypto custody for institutional investors, had partnered with Citi a year back to develop and pilot the latter’s digital asset custody capabilities.
The latest development comes amidst tumultuous market conditions that have significantly strained the relationships of traditional financial firms that tapped into the digital assets industry.
Strain in Citi and Metaco’s Relationship?
According to Bloomberg’s sources familiar with the matter, both Citi and Metaco have started informal talks with other providers. However, the deliberations are private, and hence, the sources have chosen to remain anonymous.
The reason for the decision has not been revealed yet, as a Citi representative declined to comment. The latest wave of uncertainty that has gripped the crypto industry induced several of its dedicated banking partners to go under or step back from crypto firms.
The report cited examples such as the recently-launched platform EDX Markets, a crypto exchange backed by firms including Citadel Securities, Fidelity Digital Assets, and Charles Schwab Corp., that scrapped its plan to leverage Paxos as a custodian.
Similarly, banking giant State Street Corp. also ended its licensing agreement with crypto custody firm Copper last month, thereby winding down its enterprise infrastructure business to bridge banks and hedge funds with digital assets. Copper’s association with State Street lasted for over a year since its partnership last March.
Ripple Partnership to Blame?
Last month, blockchain firm Ripple announced spending $250 million to acquire Metaco in a bid to expand its services to enable customers custody their digital assets with its forthcoming product suite. Commenting on the development, Metaco Founder and CEO Adrien Treccani said that the acquisition will allow the Swiss company to scale up in the market.
But with Ripple itself being embroiled in a long-drawn lawsuit with the US Securities and Exchange Commission (SEC) and custody becoming a bone of contention for the crypto industry, Citi’s decision to review the partnership, which has been in place since last summer, appears to be alarming.
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