JPMorgan plans to lend against Bitcoin and Ethereum

World’s largest bank, JPMorgan Chase, is weighing plans for a new policy that would allow it to lend against clients’ cryptocurrency holdings, signaling a major turning point in the traditional banking sector’s embrace of digital assets.

The move would represent a sharp reversal for CEO Jamie Dimon, who infamously called Bitcoin a “fraud” in 2017 and claimed it was only useful to “drug dealers and murderers.” 

According to people familiar with the matter, JPMorgan could begin offering crypto-collateralized loans as early as next year, although the plans remain subject to change. The bank declined to comment.

Dimon softens crypto stance as JPMorgan expands push into digital assets

If the initiative is implemented, it would allow clients to borrow against assets like Bitcoin and Ethereum—marking the clearest indication yet that Wall Street giants are integrating cryptocurrencies into their core services. It would also put JPMorgan ahead of competitors like Goldman Sachs, which has yet to accept crypto as collateral.

In recent years, Dimon has tempered his stance. “I don’t think you should smoke, but I defend your right to smoke. I defend your right to buy Bitcoin. Go at it,” he said in May. His earlier comments, which included threats to fire traders who dabbled in crypto, reportedly alienated potential clients who had built wealth through digital assets or held strong convictions in the sector’s long-term potential.

JPMorgan has already dipped into crypto through plans to lend against holdings in crypto exchange-traded funds (ETFs). However, lending against the digital tokens themselves would be a significant leap, especially as regulatory sentiment in Washington shifts. 

Stablecoin legislation spurs Wall Street interest

The House of Representatives recently passed the first major crypto legislation to regulate stablecoins—digital tokens pegged to fiat currencies like the US dollar—which large banks have welcomed as a gateway to easier digital asset operations.

Other firms are following suit. Morgan Stanley is weighing crypto trading options via its E*Trade platform, and broader institutional interest has picked up amid expectations that a second Trump administration could bring looser oversight than President Biden’s policies.

Still, hurdles remain. A key concern for banks is managing money laundering risks and compliance obligations tied to cryptocurrencies. Additionally, JPMorgan must address technical challenges, such as managing seized collateral in case of loan defaults. Unlike most major banks, JPMorgan does not hold crypto directly on its balance sheet. Instead, it would likely work with a third-party custodian, such as Coinbase, to manage the assets.

Still, hurdles remain. One of the biggest worries for banks is managing the risk of money laundering and the regulatory requirements associated with cryptocurrencies. And JPMorgan has to grapple with technological hurdles, like how to handle collateral confiscated from borrowers that fail to pay back their loans. In contrast to many other big banks, JPMorgan doesn’t keep crypto directly on its balance sheet. Instead, it would presumably use a third-party custodian, like Coinbase, to store the assets.

Despite its cautious approach to mainstream cryptocurrencies, JPMorgan has long been active in the broader digital asset space. In 2019, it launched JPM Coin—the first digital token issued by a US bank, to streamline wholesale payments between institutional clients.

Dimon recently said the bank plans to expand its role in stablecoins, including its own JPMorgan Deposit coin, although he has been skeptical of their advantages over traditional payment channels.

Speaking during the bank’s Tuesday earnings call, Dimon stressed the need to understand and become an expert in the space, adding that stablecoins are part of a legitimate financial ecosystem. However, there’s a question over their practical use.