JPMorgan Chase to Allow Institutional Clients to Use Bitcoin and Ether as Collateral

JPMorgan Chase reportedly plans to allow its institutional clients around the world to use their Bitcoin and Ether holdings as collateral for loans.

The program is set to be offered by the end of the year, Bloomberg reported Friday (Oct. 24), citing unnamed sources.

The bank will use a third-party custodian to manage the pledged tokens, according to the report.

JPMorgan Chase did not immediately reply to PYMNTS’ request for comment.

The bank considered lending against Bitcoin once before, in 2022, but put the idea on hold, according to the Bloomberg report.

Its latest move comes at a time when the cryptocurrency market has grown, regulations have eased and clients are seeking support for crypto, the report said.

It was reported in June that JPMorgan Chase was planning to offer financing to clients using spot bitcoin exchange-traded funds as collateral.

That program applies globally across retail and institutional segments, and it allows clients’ holdings in bitcoin ETFs to count toward net worth and liquidity calculations.

PYMNTS reported in June that crypto collateral was poised to gain traction in traditional finance and lending.

There has been a rise in bitcoin as a form of collateral in loans issued by big banks, used as inputs to determine applicants’ net worth and liquidity, and by extension, loans.

Goldman Sachs has been accepting bitcoin as loan collateral since as far back as 2022.

In March, the Office of the Comptroller of the Currency issued a letter that rescinded earlier guidelines on crypto and opened the door for banks and lenders to allow digital holdings to be part of secured lending activity.

In April, the Federal Deposit Insurance Corp. and the Federal Reserve withdrew earlier warnings that had cast a chill over banks’ involvement with cryptocurrencies.

The joint statements that were withdrawn addressed crypto-asset risks and liquidity risks resulting from crypto-asset market vulnerabilities.

In addition to withdrawing those joint statements, the Federal Reserve said in an April press release that it was rescinding its 2022 supervisory letter that said state member banks must provide it with advance notification of crypto-asset activities and its 2023 supervisory letter regarding “the supervisory nonobjection process for state member bank engagement in dollar token activities.”