JPMorgan Chase & Co. is reportedly working to allow its institutional clients to use Bitcoin and Ethereum as collateral for loans, marking one of the most direct integrations of crypto assets into Wall Street’s credit systems to date.
The program, expected to launch by the end of 2025, will rely on a third-party custodian to hold the pledged tokens, per a Bloomberg report hours before the Friday opening bell. JPMorgan shares nudged 0.18% in pre-market trading at $294.93.
Under the reported framework, clients could post crypto held by an approved custodian against credit lines or structured loans, allowing banks to manage exposure without directly taking custody of digital assets.
It builds on JPMorgan’s earlier decision in June to accept crypto exchange-traded funds (ETFs) as collateral, extending that policy from derivatives and fund shares to the underlying assets themselves.
Decrypt has reached out to JPMorgan to ask whether the program is already live or still in development, and how the bank plans to manage custody, valuation, and risk for crypto used as loan collateral, and will update this article should the bank respond.
By the rules
Once live, the program could position Bitcoin and Ethereum within the same collateral ecosystem as traditional investment instruments like Treasuries, gold, or equities, though with higher volatility and risk.
But JPMorgan’s move could be “more about inevitability” given that it wasn’t as welcoming to crypto before, Samuel Patt, co-founder at Bitcoin metaprotocol OP_NET, told Decrypt.
Patt noted a “fundamental tension” at work, in which Bitcoin, for one, was built “to remove counterparty risk, not be rehypothecated inside the same system it was meant to disrupt.”
“The more financial institutions integrate Bitcoin, the more they’ll have to learn to play by its rules, not the other way around,” Patt said.
When banks move to accept crypto, they introduce “24/7, mark-to-market assets into a system that still operates on legacy settlement rails,” he said. “This challenges credit exposure management; you can’t treat BTC the same way you treat treasuries or corporate bonds.”
“The risk desk now has to model intraday volatility, exchange liquidity, and custodial solvency in real time. Credit committees will need new frameworks for crypto collateral: dynamic margins, off-chain oracle feeds, and custodial risk insurance become core requirements, not afterthoughts,” Patt explained.
Banks integrating digital assets
JPMorgan’s move appears to follow a broader alignment among U.S. banks as they integrate digital assets into lending and asset management amid efforts to recalibrate federal guidance on crypto engagement.
Before the GENIUS Act came to fore in July, major U.S. banks were already consolidating plans to challenge the stablecoin market.
In July, BNY Mellon partnered with Goldman Sachs to launch a tokenized money market product for institutional clients, extending its digital asset custody and settlement capabilities that had been around since 2021.
Last month, Morgan Stanley committed to enabling retail clients on its ETrade platform to trade Bitcoin, Ethereum, and Solana by the second quarter next year. Earlier this month the bank confirmed it is easing restrictions on crypto investments, expanding access to crypto funds across all client segments and account types, including retirement accounts.
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Source: https://decrypt.co/345831/jpmorgan-to-let-clients-use-bitcoin-and-ether-as-collateral-for-loans-report
