JPMorgan Chase & Co. is set to allow institutional clients to use Bitcoin and Ether as collateral for loans by the end of the year. This means investors would have the facility to source funds from the bank using their cryptocurrency investments for collateral, just like they do with stocks, bonds, or gold.
According to Bloomberg, the program will be available globally and will use a trusted third-party company to hold and protect the digital tokens. This builds on JPMorgan’s earlier step of accepting crypto-linked exchange-traded funds (ETFs) as collateral for loans, including BlackRock’s iShares Bitcoin Trust.
Jamie Dimon’s Changing Tone on Bitcoin
For JPMorgan, the change is both practical and symbolic. The bank’s chief executive, Jamie Dimon, has long been known for his skepticism toward Bitcoin. He once called it a “fraud” and compared it to a “pet rock.”
However, Dimon has since softened his tone. “I don’t think we should smoke, but I defend your right to smoke,” he said at a company conference in May. “I defend your right to buy Bitcoin, go at it.” Even though he remains cautious about crypto, the bank’s new plan shows that client demand and market growth are too big to ignore.
Moreover, other major Wall Street firms are following the same path. For instance, Morgan Stanley plans to let users on its E*Trade platforms, buy and sell cryptocurrencies next year.
Fidelity, State Street, and Bank of New York Mellon are also expanding their crypto services, mainly offering safe storage for digital assets.
Meanwhile, JPMorgan first looked into lending against Bitcoin in 2022 but paused the plan due to unclear rules. Now, with regulations in place in the European Union, Singapore, the United Arab Emirates, among other countries, the bank is pursuing the concept again.
Also Read: Bitcoin Could Still Crash 50% Even With Wall Street Support: Tom Lee
