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.
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.”
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.
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.
