Citi Links Regulation and Reality in the Next Phase of Digital Assets

 

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When PYMNTS and Citi launched the “From the Block” podcast, the goal was not to unpack the mechanics of blockchain or recap legislative fine print. It was to answer a more practical question: What actually changes “on the block” when digital asset innovation moves out of theory and into regulated financial systems?

In the first episode of the new podcast and video series, PYMNTS CEO Karen Webster took the microphone with Ryan Rugg, global head of digital assets for Citi Treasury and Trade Solutions (TTS), to explore that question in the context of a pivotal moment for the industry.

The GENIUS Act has passed. President Trump has signed an executive order establishing a bitcoin reserve. And for the first time in years, regulatory signals and institutional use cases appear to be converging.

Webster opened the conversation by setting the frame. The industry has already spent months debating what the GENIUS Act did. The more important issue, she said, was whether it changed behavior.

“A year ago, GENIUS was framed as a regulatory milestone,” Webster said. “Did it just create clarity, or did it fundamentally change behavior?”

Rugg’s answer placed GENIUS in a broader political and institutional context. The legislation, she said, mattered not just on its own, but as part of a wider shift in how the U.S. government is thinking about innovation in financial services.

“Looking back on 2025, GENIUS was one key legislative piece,” Rugg said. “But if you think about it, there was also an executive order signed by President Trump. The bitcoin reserve is established. So clearly a foundational shift in the way that this administration is thinking about not just digital assets, but innovation overall.”

For regulated institutions, that posture matters. Banks, Rugg noted, do not operate in gray areas. They need defined rules to invest, integrate and scale. “This is giving that pathway to our regulators to start laying those foundations for many institutions,” she said.

Webster agreed that clarity was necessary but pressed on the gap between legislation and execution. “There’s a GENIUS Act and then there’s the rulemaking,” she said. “We’re not quite there yet.”

Rugg didn’t dispute that. GENIUS passed in July, she said, and the industry is still early in the regulatory and implementation cycle. But legitimacy, she argued, is not a small thing. It signals direction. And direction is what allows institutions to move forward.

That moment set the tone for the rest of the conversation. This was not about hype or disruption for its own sake. It was about whether digital assets are finally becoming usable infrastructure.

The Use Case That Changes the Conversation

Webster pivoted quickly from regulation to application. Stablecoins and tokenized deposits are often treated as the headline use cases for digital assets, she said. But she wanted to know whether new use cases were actually emerging, or whether institutions were simply more confident about taking the next steps.

Rugg framed the shift as one of perspective. Blockchain technology has been operating in live environments for years, she said, but mostly outside the regulated institutional core. What changed in the past year was the ability to see how that technology fits within existing financial and regulatory frameworks.

Rugg also pushed back on the idea that stablecoins represent a threat to banks. For her, they are simply new rails.

“It’s very reminiscent of what happened in the early 2000s with payment innovators,” Rugg said. “Initially, people thought they were going to put banks out of business. Instead, they ended up running on bank rails.”

Webster brought the conversation back to first principles. Adoption and scale, she said, come from use cases that are demonstrably better than the status quo. “What are the use cases where you see adoption and scale, the green shoots really starting to pop?” she asked.

That is where Rugg identified what she called the “killer” use case: frictionless, 24/7 movement of money and liquidity. “One of the green shoots is definitely around this 24/7, 365 frictionless movement of money and liquidity,” she said. “That was where I started my journey at Citi, really thinking about the pain points our clients gave us.”

Those pain points are familiar to any executive running a global business. Banking cutoffs, holiday calendars and settlement delays force companies to forecast and pre-position liquidity across dozens of markets. “If it’s 5  p.m. in New York on Friday, that means it’s 5 a.m. in Singapore,” Rugg said. “You have to have the money at the branch before it closes.”

Webster jumped in with a consumer-grade example that underscored the absurdity. “Or T plus 10 days if you’re closing an account and trying to deposit the check you had to wait to get in the mail,” she said. “That’s always fun.”

Rugg broadened the argument. For years, blockchain had been, in her words, “a hammer looking for a nail,” cycling through use cases from identity to supply chain. What finally emerged, she said, was a foundational need: instant, multi-asset value movement.

“We’ve found that killer use case,” Rugg said. “It’s that frictionless movement of value across the globe instantaneously, and the ability to be multi-asset.”

She illustrated the point in everyday financial terms. Individuals have cash accounts and investment accounts. Moving between them introduces latency. The same is true for large corporates. Tokenization collapses that delay. “Now you can move from cash to asset and back without any T-plus-one settlement or friction,” Rugg said, pointing to tokenized money market funds as an example.

For executives, the significance is not the token itself. It is the operating model. Always-on liquidity reduces trapped cash. Real-time settlement aligns financial infrastructure with how commerce actually runs.

Why Venture Capital Misses the Point

Webster raised a question that many boardrooms quietly ask. If this infrastructure shift is real, why doesn’t the investment data reflect it? Crypto and stablecoin funding in 2025 totaled roughly $16 billion, compared with roughly $200 billion flowing into AI.

“Why the disconnect?” she asked.

Rugg reframed the metric. Venture capital, she said, is one indicator of industry health, but not the only one. The most important financial infrastructure rarely scaled as a venture story.

“Think about card networks. Think about wire systems,” she said. “They became essential through adoption and integration, not because they were sustained by venture funding.”

Foundational technologies, she argued, often disappear into the background once they work. Clients stop noticing them. That invisibility, not hype, is what signals success.

Webster agreed but returned to a structural constraint: enterprise systems. Even if digital asset rails move in real time, most ERP and treasury systems do not. “Isn’t that the long pole in the tent for getting adoption at scale?” she asked.

Rugg was blunt. Large enterprises rely heavily on those systems. Change management is unavoidable. Tokenized value movement has to integrate into existing treasury workflows that handle billions of dollars a day.

That reality led Webster to a familiar observation. A global payments CEO had recently told her that every major change in payments takes about 10 years. “When you think about it, that really is the case,” she said.

Rugg agreed on the timeline but emphasized the moment. Blockchain is arriving alongside AI and other foundational technologies. Together, they are creating an inflection point. “This is not a revolution,” she said. “This is an evolution.”

Are Stablecoins Mainstream Yet?

Webster turned to the label most executives hear most often. “Many people call stablecoins mainstream now,” she said. “Would you?”

Rugg disagreed, at least by an institutional definition of mainstream. She believes mainstream means utility for everyday users and full integration into business-as-usual operations for large enterprises. “By no stretch of the imagination do I think this is mainstream yet,” she said.

Even when banks abstract away blockchain complexity, the surrounding systems remain a bottleneck. Many ERP and treasury platforms still run on batch processes. Adding tokens introduces another layer of complexity.

Webster agreed. Real-time money movement often runs headlong into non-real-time systems.

Three Takeaways for Executives

As the conversation moved toward its conclusion, Webster pressed Rugg on three practical concerns executives raise repeatedly.

• First: proliferation. With stablecoins “popping up like rabbits in the spring,” Webster asked whether fragmentation could doom them the way earlier platform currencies failed. Rugg said consolidation is likely, but the real issue is interoperability. Without it, the industry risks re-creating a  siloed banking system. “If you don’t have interoperability,” she said, “what’s the value?”
• Second: systems. Webster returned to ERPs as the gating factor for adoption at scale. Rugg agreed that integration into treasury management and reporting workflows is essential. This is not a bolt-on decision.
• Third: mindset. Webster framed adoption as a prioritization question for CFOs. Rugg agreed. Digital assets should solve real pain points, not chase headlines. Institutions that fail to adapt to client needs risk being bypassed.

What to Watch in 2026

In the final exchange, Webster asked Rugg to look ahead. “Get out your binoculars,” she said. What should executives be watching in 2026?

Rugg pushed back on the industry’s fixation with disruption. “For 2026,” she said, “I think it’s the year we see the foundation being set for the next decade, not just the next quarter.”

Webster agreed but noted that foundational questions remain unresolved. She asked her to name the one question that must be answered by the end of 2026. Rugg didn’t hesitate.

“Are tokens going to be treated like cash?” she asked. Blockchain’s immutability allows institutions to see a token’s entire history. That transparency creates new compliance questions. How many “hops” back matter? What defines a clean token? How will regulators interpret that data?

“When I see a token that has no history, it worries me terribly,” Rugg said. “It tells me it went through a washer.”

Webster closed the loop. “It all comes back to liability,” she said. “Who bears the risk.”

“Exactly,” Rugg replied.

That, more than hype or market cycles, may determine how quickly digital assets move from promise to infrastructure.