In a significant development for Wall Street’s crypto integration, JPMorgan, one of the largest financial institutions in the US, is set to allow Bitcoin (BTC) and Ether (ETH) as collateral before the end of the year.
JPMorgan To Allow Bitcoin, Ether As Collateral
On Friday, Bloomberg reported that JPMorgan Chase & Co. plans to let its institutional clients use the two largest cryptocurrencies, Bitcoin and Ether, as collateral for loans by the end of 2025.
This follows the bank’s move to allow crypto-based Exchange-Traded Funds (ETFs) as collateral. In June, the bank began allowing both institutional and retail clients globally to use spot crypto-linked ETFs, like BlackRock’s IBIT, to pledge the investment products. Previously, clients could only do it on a case-by-case basis.
According to people familiar with the matter, the new program will be offered globally, allowing JPMorgan’s clients to pledge their Bitcoin and Ether holdings as security for loans, expanding Wall Street’s crypto integration. The program is set to rely on a third-party custodian to safeguard the pledged assets.
Bloomberg sources affirmed that the largest US bank first began exploring the idea of lending against Bitcoin in 2022. However, the project was reportedly shelved due to regulatory challenges.
Since then, there have been significant developments in the US crypto landscape, including a massive surge in institutional adoption and the government’s regulatory shift to make America the “Crypto Capital of the World.”
In July, some reports suggested that the banking giant was once again exploring the idea of expanding its lending operations to include crypto-collateralized loans, as the bank’s earlier rigid stance on digital assets seemingly alienated some prospective clients.
JPMorgan’s Crypto Shift
It’s worth noting that JPMorgan’s CEO, Jamie Dimon, has been a long-time crypto skeptic. In January, the CEO called the flagship crypto a “Ponzi scheme” and dismissed it as “useless as a pet rock.”
Nonetheless, he announced a change in the bank’s policy in May to allow clients to purchase Bitcoin. “We’re not going to custody it. We’re going to put it in statements for clients,” Dimon stated, explaining that the decision came despite his personal stance on digital assets.
Since then, JPMorgan has shared plans to embrace stablecoins and crypto trading. In July, the bank announced its intention to launch a limited version of a stablecoin for its clients, arguing that they “can’t afford to stay on the sidelines” as other major institutions start to offer crypto-linked products.
Last week, JPMorgan also announced its plans to allow clients to trade crypto assets. As reported by Bitcoinist, senior executives affirmed that JPMorgan is developing services that will enable its clients to trade cryptocurrencies directly through the bank.
Notably, US Bancorp previously announced that it has relaunched its offering of crypto custody services after more than three years, following the removal of a Biden-era guidance that prevented financial institutions from providing these services.
Meanwhile, Citigroup was also exploring plans to offer crypto custody, payment services, and custody offerings for spot crypto ETFs. However, JPMorgan’s global head of markets and digital assets, Scott Lucas, noted that custody is “not on the horizon near-term.”
The executive explained last week that risk rules and regulatory developments will determine how far the bank expands in the future.