Oct 27 (Reuters) - Citigroup ( C/PN ) and cryptocurrency

exchange Coinbase plan to collaborate on digital asset

payment solutions for the U.S. bank's institutional clients, to

expand the offering to global clients in the future.

The partnership will initially focus on enabling users to

deposit and withdraw traditional currencies (commonly referred

to as "fiat" in crypto) through Coinbase's services, marking a

significant step as it allows smooth transitions between

traditional money and digital assets like cryptocurrencies, the

two companies said in a joint statement on Monday.

Additionally, the collaboration will streamline payment

operations, Citi said.

"By combining their reach with Coinbase's leadership in

digital assets, we're creating solutions that can simplify and

expand access to digital asset payments," said Brian Foster,

global head of Crypto as a Service at Coinbase.

Citi said more details on specific features, including

exploring ways to convert traditional currency into stablecoins,

will be disclosed in the coming months.

Stablecoins are digital tokens designed to keep a constant

value. They are often backed by traditional assets such as the

U.S. dollar or government debt.

They have surged in popularity, and their demand is expected

to increase further after the U.S. passed its GENIUS Act in July

that sets federal rules for stablecoins.

Dealmaking within the digital assets industry has picked up

pace this year as a crypto-friendly Trump administration

encourages companies to expand their business in the U.S.,

providing a favorable environment for growth and investment.

Coinbase, one of the world's largest cryptocurrency

exchanges, shelled out $375 million to buy investment platform

Echo, while earlier this year it had struck a $2.9 billion deal

for crypto options provider Deribit.