J.P. Morgan Considering Bitcoin and Ethereum as Collateral for Loans
The crypto-collateral program would be offered globally and would rely on an external custodian to safeguard pledged assets.
Quick overview
- J.P. Morgan is considering accepting Bitcoin and Ethereum as collateral for loans to institutional clients by the end of the year.
- This initiative reflects a growing institutional demand for cryptocurrencies and marks a significant shift in J.P. Morgan's stance on digital assets.
- The proposed crypto-collateral program would allow clients to use Bitcoin or Ethereum directly, enhancing liquidity access for long-term holders.
- This move follows BlackRock's recent efforts to integrate Bitcoin into traditional finance, influencing major financial institutions.
The bank is evaluating whether to offer this option to institutional clients before the end of the year.
J.P. Morgan is analyzing the possibility of accepting the cryptocurrencies Bitcoin and Ethereum as collateral for loans to institutional clients, according to Bloomberg.
The move would represent a further step in the integration of digital assets, driven by growing institutional demand for cryptocurrencies. It also marks a significant shift considering that J.P. Morgan CEO Jamie Dimon—currently visiting Argentina—once labeled Bitcoin a “fraud” and said he would fire any trader caught dealing it.
J.P. Morgan’s initiative, expected to take effect in the coming weeks, follows a separate Bloomberg report indicating that the firm has been analyzing whether to accept spot Bitcoin ETFs as collateral for loans.
The crypto-collateral program would be offered globally and would rely on an external custodian to safeguard pledged assets. It would allow clients to post Bitcoin or Ethereum directly as collateral instead of ETF shares, providing easier access to liquidity against long-term cryptocurrency holdings.
J.P. Morgan first explored Bitcoin-backed lending in 2022, but the project was later suspended, Bloomberg recalled.
On Friday, the crypto market attempted to close the week in positive territory despite high volatility. Bitcoin climbed 1% to around $111,100, while Ethereum posted a sharper 2% gain, attempting to consolidate above the $4,000 level.
The paradigm shift among major traditional financial institutions was sparked by BlackRock, which recently moved to bring Bitcoin closer to large Wall Street investors, facilitating more than $3 billion in conversions of Bitcoin into ETFs.
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