The bank plans to let trading and wealth-management clients use some crypto-linked assets, such as spot bitcoin exchange-traded funds (ETFs), as collateral for loans. Starting in the upcoming weeks, JP Morgan will provide financing backed by shares of IBIT, according to Bloomberg. For some clients, the bank will also factor crypto holdings into assessments of net worth and liquidity, putting them at the same level as traditional securities like stocks.
The decision comes as the bank shifted its stance on cryptocurrencies and digital assets. Up until this point, the bank has been reluctant to work with crypto assets due to their use in illegal activities such as sex trafficking and money laundering. Despite these concerns, the bank’s change of strategy reflects the institutional pressure to accommodate crypto as its footprint in traditional finance grows.
Wealth management firms are seeing a wave of client demand for exposure to digital assets. The public listing for crypto firms in the US stock exchanges advanced this trend, together with the rising interest from investors ahead of regulatory clarity.
Political pressure also contributes to the bank’s decision, with federal agencies being pressured to ease crypto regulations thanks to Donald Trump. This pushes banks that have historically been wary of these assets to accommodate them, as blocking access to crypto could potentially be seen as discrimination, not caution.
This ties into the wider trend of banks entering the crypto market. Banks are considering a more active role in offering crypto-related services, beyond traditional offerings like lending and deposit-taking. Traditional institutions now have the opportunity to provide their own crypto services, such as payment applications and tokenisation, and seek to gain crypto licences.
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