JPMorgan Set to Enable Clients to Use Bitcoin and Ether as Loan Collateral
JPMorgan is moving forward with plans to allow clients to borrow against their Bitcoin and Ether assets, a shift that could enhance the appeal of these cryptocurrencies among institutional investors.
Investment banking titan JPMorgan Chase is reportedly initiating plans to permit clients to utilize Bitcoin and Ether as collateral for loans, illustrating Wall Street’s ongoing shift towards accepting digital currencies.
This initiative potentially allows JPMorgan’s international clientele to secure loans based on their holdings of Bitcoin (BTC) and Ether (ETH), as per a Bloomberg report released on Friday, which references sources familiar with the developments.
The service would involve safeguarding clients’ Bitcoin and Ether through a third-party custodian, according to insider information provided to the news source.
If validated, this evolution could enhance the attractiveness of the two premier cryptocurrencies for institutional investors, reminiscent of the landmark approval of the first US Bitcoin exchange-traded fund (ETF) back in January 2024.
A JPMorgan representative chose not to provide a comment on the matter.
This report comes on the heels of ongoing speculation that JPMorgan might soon accept Bitcoin and Ether ETFs as collateral.
JPMorgan’s Ongoing Crypto Initiatives
JPMorgan has been exploring the option of cryptocurrency-backed loans since at least July, when initial discussions surfaced.
However, the Financial Times previously indicated that the implementation of Bitcoin and Ether as collateral assets might not take place until 2026.
Additionally, the investment bank has shown interest in stablecoins during an earnings call on July 15, where CEO Jamie Dimon mentioned their aim to engage with stablecoins to better comprehend this evolving asset class.
JPMorgan was among the pioneer US banks to enter the cryptocurrency market. In 2020, the bank launched JPM Coin, a stablecoin pegged to the dollar, and reported holding shares in various Bitcoin ETFs by 2024.
This early adoption comes despite CEO Dimon’s prior criticism of digital currencies. In 2018, he claimed not to be interested in cryptocurrencies, and in 2022, labeled them as ‘decentralized Ponzi schemes.’ Nonetheless, he later acknowledged positive aspects of blockchain technology.
