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Wall Street Giants Morgan Stanley and Citigroup Push Deep Into Cryptocurrency Services

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Nexo Partners with Bakkt for US Crypto Exchange and Yield Programs

Key Highlights

  • Morgan Stanley has submitted an application to the OCC for a national trust bank charter designed for cryptocurrency custody services
  • The proposed entity, dubbed “Morgan Stanley Digital Trust,” would facilitate digital asset custody, trading activities, swaps, staking services, and transfers
  • Citigroup is preparing to roll out institutional bitcoin custody services within the current year, embedding them into existing traditional asset management frameworks
  • Citi’s vision includes unified account management where clients handle bitcoin together with securities and cash, featuring cross-margining functionality
  • Major financial institutions are building out crypto capabilities in response to rising institutional client interest in digital asset services

Morgan Stanley has submitted a request for a de novo national trust bank charter through the Office of the Comptroller of the Currency (OCC). The submission, which arrived on February 18, bears the designation “Morgan Stanley Digital Trust, National Association.”

This charter would grant Morgan Stanley authorization to provide digital asset custody services for its client base. The planned subsidiary intends to facilitate buying, selling, swapping, transferring, and staking of cryptocurrencies.

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A national trust bank charter empowers financial institutions to conduct fiduciary operations including asset protection and custody services. This represents Morgan Stanley’s inaugural trust charter designed exclusively for cryptocurrency operations.

Morgan Stanley has demonstrated aggressive expansion into digital assets recently. The firm brought aboard equity markets veteran Amy Oldenburg in January to spearhead its cryptocurrency division and submitted applications for spot Bitcoin and Solana ETFs, subsequently filing for a staked Ether ETF as well.

The financial institution, which manages approximately $8 trillion in client assets, is simultaneously deploying spot cryptocurrency trading capabilities through its E*TRADE platform. The bank is also considering lending products and yield-generating opportunities connected to digital currencies.

Current job postings reveal Morgan Stanley is recruiting for positions such as digital assets strategy director and digital assets product lead. The institution is additionally investigating wallet technology implementation throughout its wealth management platform.

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Citi Plans Institutional Bitcoin Custody

Citigroup has revealed intentions to introduce institutional bitcoin custody services before year-end. Nisha Surendran, who oversees Citi’s digital asset custody development, shared these details during Thursday’s World Strategy Forum.

Surendran characterized the objective as rendering “bitcoin bankable.” Citi aims to incorporate bitcoin into identical custody, reporting, and taxation systems currently deployed for conventional assets such as stocks and bonds.

Clients would gain the ability to initiate transactions through SWIFT messaging, APIs, or graphical user interfaces. Citi would manage all clearing and settlement procedures behind the scenes.

The financial institution additionally intends to enable clients to maintain bitcoin positions alongside U.S. Treasuries, international bonds, and tokenized money market funds within a unified custody account. This framework would permit cross-margining between cryptocurrency holdings and traditional asset classes.

Citi conducted research among its institutional client base and discovered they prefer not to handle wallets and private keys directly. Instead, they seek bitcoin access through established banking infrastructure.

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The Broader Push by Major Banks

Citi maintains connections to over 220 payment and settlement networks worldwide. The bank has introduced Citi Token Services for cash management, a continuously operating blockchain-based network utilized for internal global fund transfers.

JPMorgan has pursued a comparable strategy through its JPM Coin offering. The New York Stock Exchange similarly unveiled intentions for a round-the-clock blockchain-powered trading platform for tokenized equities and ETFs launching later in 2025.

The OCC granted conditional approval to five cryptocurrency-focused national trust bank applications in December, encompassing Ripple, BitGo, Fidelity Digital Assets, and Paxos. Stablecoin infrastructure provider Bridge, acquired by Stripe, along with Crypto.com have subsequently obtained conditional approvals.

Payoneer similarly submitted a national trust bank charter application this month, potentially positioning it to issue stablecoins and deliver cryptocurrency services.

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Crypto World

Not the Bottom Yet? CryptoQuant Data Exposes Bitcoin’s Brutal Deleveraging

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How Will Markets React to $3B Crypto Options Expiring Today?


The combination of both metrics suggests the current regime is consolidative or mid-cycle bearish, with definitive capitulation likely to occur soon.

Current market dynamics point to a reset in motion, with Bitcoin undergoing deleveraging. However, the leading digital asset is yet to form a bottom for this bear cycle, despite cooling market conditions.

According to a report from CryptoQuant, metrics such as falling open interest and Bitcoin basis compression on the Chicago Mercantile Exchange (CME) indicate ongoing deleveraging.

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More Pain For BTC?

The CME basis compression is a futures yield curve that reflects demand for leveraged long exposure. The curve has been in a downward trend since 2025, following patterns that preceded the 2019 and 2022 bear markets. However, the slope remains positive to this day. While the curve’s current slope suggests leverage demand and risk appetite are cooling, the market has not yet reached conditions historically associated with capitulations. It confirms gradual ongoing deleveraging, but not capitulation.

The yield curve compression currently signals weaker demand for leveraged long exposure, as market participants become less willing to pay a premium for bitcoin (BTC) exposure. This points to weakening bullish conviction and a more neutral or bearish backdrop. However, longer-dated contracts are still trading at a premium to spot and short-dated futures.

In essence, the curve reflects an environment where price rallies may face resistance until a definitive cyclical bottom forms. Past cycle bottoms have formed only when the yield curve slope turned negative, signaling backwardation and acute deleveraging. This means that BTC still has more downside to come.

Cyclical Bottom Coming Soon

Additional proof that the Bitcoin market is undergoing a gradual reset in positioning rather than the acute stress needed to form a bottom is the decline in futures open interest. This metric has fallen sharply from its 2025 peak, following a trend seen during the 2022 bear market.

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CryptoQuant found that the CME Bitcoin futures open interest has plummeted by 47%, similar to the 45% plunge witnessed in 2022. Such a move reflects a major unwind of leveraged positions following a period of increased participation. This unwind is characterized by prolonged liquidation, reduced speculative demand, and lower hedging activity, confirming an ongoing deleveraging cycle.

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The combination of a declining open interest and a positive yield curve suggests the current regime is consolidative or mid-cycle bearish, with definitive capitulation likely to occur soon.

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BTC tries to reclaim $64,000 as funding rates hit three month low

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BTC Open Interest (Coinglass)

Bitcoin is looking to reclaim $64,000 on possible short squeeze after earlier falling to as low as $63,000 following U.S. and Israeli strikes on Iran.

At the same time, perpetual futures funding rates dropped to -6%, according to CoinGlass, marking the second lowest level in the past three months. The last time funding was this negative was on Feb. 6, when bitcoin bottomed near $60,000.

Perpetual funding rates represent the periodic payments exchanged between traders in perpetual futures markets. When rates are positive, traders holding long positions pay those holding shorts. When rates turn negative, shorts pay longs.

Deeply negative funding typically signals aggressive short positioning and bearish sentiment, as traders are willing to pay a premium to maintain downside bets.

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Meanwhile, coin margined open interest rose from 668,000 BTC to 687,000 BTC over the past 24 hours.

Measuring open interest in BTC terms removes the distortion caused by price swings. Rising open interest alongside negative funding suggests growing participation, with an increasing share of traders positioned for further downside.

In the past 24 hours, more than $500 million in crypto positions have been liquidated, according to CoinGlass data. The bulk of those liquidations were long positions, which accounted for over $420 million, highlighting the scale of forced selling as prices moved lower.

BTC Open Interest (Coinglass)
BTC Open Interest (Coinglass)

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Tether Freezes $4.2B in USDT Linked to Crime in 3 Years: Report

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Tether Freezes $4.2B in USDT Linked to Crime in 3 Years: Report

Stablecoin issuer Tether has reportedly frozen roughly $4.2 billion worth of its USDt tokens connected to suspected criminal activity over the past three years.

Most of the blocked funds were restricted since 2023, as regulators and law enforcement agencies intensified scrutiny of crypto-related fraud and sanctions evasion, the El Salvador-based firm reportedly told Reuters on Friday.

Tether’s dollar-pegged USDt (USDT) token is the largest stablecoin in circulation, with more than $180 billion outstanding, up sharply from about $70 billion three years ago.

Tether can freeze tokens directly on the blockchain by blacklisting wallet addresses when requested by authorities.

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Related: Tether-backed Oobit adds crypto-to-bank transfers for local payment networks

Tether helps governments freeze funds

On Tuesday, Tether announced that it has assisted the US Department of Justice in seizing nearly $61 million in USDt tied to “pig-butchering” scams, a scheme in which criminals build relationships with victims before persuading them to send money.

Earlier this month, the company also froze approximately $544 million in cryptocurrency at the request of Turkish authorities, blocking funds tied to an alleged illegal online betting and money-laundering operation.

According to blockchain analytics firm Elliptic, by late 2025, stablecoin issuers Tether and Circle had blacklisted around 5,700 wallets holding about $2.5 billion, with roughly three-quarters of the addresses containing USDt when they were frozen.

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Related: Tether USDT supply set for biggest monthly decline since 2022 FTX collapse

USDt supply shrinks

As Cointelegraph reported, USDt is on track for its largest monthly supply drop in three years, with circulating supply falling about $1.5 billion in February after a $1.2 billion decline in January, according to blockchain data. The contraction echoes the period following the FTX collapse in late 2022 and may point to tighter liquidity in crypto markets.

USDt market cap drops in past month. Source: CoinMarketCap

Tether said the figures reflect short-term distribution changes rather than weakening demand, noting USDC (USDC) also saw a multibillion-dollar reduction during the same period.

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