In a major development for Wall Street’s crypto integration, JPMorgan, one of the largest financial institutions in the US, plans to allow Bitcoin (BTC) and Ether (ETH) as collateral before the end of the year.
JPMorgan allows Bitcoin and ether as collateral
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 worldwide to use spot crypto-linked ETFs, such as BlackRock’s IBIT, to pledge its investment products. Previously, customers could only do this on a case-by-case basis.
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, according to people familiar with the matter. The program will rely on a third-party custodian to protect the pledged assets.
Bloomberg sources confirmed that the largest US bank first started exploring the idea of making loans 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 increase in institutional adoption and the shift in government regulation 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 business to include crypto-backed loans, as the bank’s previous rigid stance on digital assets seemingly alienated some potential customers.
Cryptoshift from JP Morgan
It’s worth noting that JPMorgan 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.”
Nevertheless, in May he announced a change in the bank’s policy to allow customers to buy Bitcoin. “We’re not going to take it into custody. We’re going to include it in statements to 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 customers, arguing that they “cannot afford to sit on the sidelines” while other major institutions begin offering crypto-linked products.
Last week, JPMorgan also announced its plans to allow customers to trade crypto assets. As reported by Bitcoinist, senior executives confirmed that JPMorgan is developing services that will allow 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 Biden-era guidelines that prevented financial institutions from offering these services.
Meanwhile, Citigroup also explored plans to offer crypto custody, payment services and custody offerings for spot crypto ETFs. However, Scott Lucas, JPMorgan’s global head of markets and digital assets, noted that custodial “is not in the near-term horizon.”
The director explained last week that risk rules and regulatory developments will determine how far the bank will expand in the future.
Bitcoin trades at $110,064 in the one-week chart. Source: BTCUSDT on TradingView
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