JPMorgan is reportedly considering loans backed directly by clients’ Bitcoin and Ethereum holdings, a move that would pull TradFi further into crypto.
The Financial Stability Board (FSB) considers the bank to be a Global Systematically Important Bank (G-SIB), which means that it’s so relevant to economic stability on Earth that its collapse could potentially mean widespread financial distress.
Led by CEO Jamie Dimon, who has openly expressed his dislike for Bitcoin, the bank has historically been cautious around digital assets, but its stance has been shifting.
Now, this idea of offering direct cryptocurrency collateral could take the bank a step further into digital assets. As per FT, JPMorgan could begin Bitcoin and Ethereum-backed loans next year. That said, the report cautions that the plans are subject to change.
The bank’s earlier rigid stance may have cost it business, as revealed by one source cited by the newspaper.
According to one person familiar with the matter, Dimon’s early comments about bitcoin — in which he also said he would fire any trader who traded it — had alienated some prospective clients who either had made their money through crypto assets or were long-term believers in their potential.
Because of their importance, G-SIBs face heightened regulatory scrutiny. So for these institutions to be willing to dip into cryptocurrencies shows how far the sector has come in gaining acceptance within traditional finance circles.
While cryptocurrency institutional adoption has been making strides, Bitcoin itself has gone cold recently as its price has hit a phase of consolidation. The asset is currently trading around $119,000, which is more or less unchanged from last week.
