Bitcoin News Update: Wall Street's Crypto Strategy: JPMorgan's Collateral Decision Stirs Friction with Traditional Systems
- JPMorgan will let institutional clients use Bitcoin and Ethereum as loan collateral by year-end, advancing digital asset integration in traditional finance. - Major banks like Morgan Stanley and Fidelity are expanding crypto offerings, reflecting rising institutional demand for digital assets. - JPMorgan’s CEO, Jamie Dimon, now permits BTC purchases but avoids custody, while volatility and rehypothecation risks persist. - Swiss and U.S. banks, including Goldman Sachs, are adopting crypto-collateralized l
JPMorgan Chase & Co. plans to permit institutional clients to use
This move signals growing institutional interest in cryptocurrencies and reflects a broader transformation in Wall Street’s attitude toward digital assets. JPMorgan’s CEO, Jamie Dimon, who was once openly critical of Bitcoin, has recently relaxed his position, now allowing clients to buy
This updated collateral policy will let clients access liquidity by leveraging their crypto assets without selling them, which could increase demand for BTC and
JPMorgan’s strategy builds on its growing digital asset infrastructure, including its J.P. Morgan Deposit Token (JPMD) and the Onyx blockchain platform, which handles billions in tokenized transactions, according to
Nonetheless, some experts warn of potential systemic dangers. Benzinga analysts argue that using volatile cryptocurrencies as collateral could create risks of contagion, as sharp price drops might lead to widespread margin calls and liquidity shortages. This concern is reminiscent of the 2022 crypto downturn, when the collapse of Celsius Network and Terra/Luna resulted in $20 billion in losses. While JPMorgan’s program is innovative, it could intensify such risks if not managed carefully.
The bank’s new direction reflects a broader shift in the industry. Swiss institutions like Luzerner Kantonalbank, Sygnum, and Swissquote have already adopted similar practices, accepting Bitcoin and crypto ETFs as collateral, according to crypto.news. In the United States, Goldman Sachs and BNY Mellon have also entered the crypto-backed lending space, while Citigroup and U.S. Bancorp are working on custody solutions, as reported by
JPMorgan’s latest move highlights its pragmatic response to client interest, even as Dimon continues to express doubts about the value of cryptocurrencies, according to BeInCrypto. “At some point, there will be a form of digital currency,” he recently commented, though he maintains that Bitcoin lacks “intrinsic value.” For now, the bank’s actions demonstrate that Wall Street’s adoption of crypto is gaining momentum, despite ongoing concerns about unresolved risks.
Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.
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