JPMorgan is allowing institutional clients to use Bitcoin and Ether as collateral for U.S. dollar loans. A Bloomberg report published before Friday’s market open said the bank plans to expand crypto integration across its credit systems by late 2025, while relying on third-party custodians to handle custody and limit direct risk exposure.
The bank will not directly hold the digital assets tied to these loans. Instead, approved custodians will safeguard the pledged Bitcoin and Ether on behalf of clients. That setup keeps the lending relationship inside JPMorgan’s existing credit framework while moving the custody function to outside firms, reducing the bank’s direct exposure to operational risks tied to holding crypto.
Policy expands from crypto ETFs to underlying assets
Clients are expected to use their crypto holdings to secure credit lines or structured loans. The arrangement resembles collateral models already used for equities and bonds, but digital assets bring a different set of demands because prices can move sharply over short periods. In June, JPMorgan had already started accepting crypto exchange-traded funds as collateral. This latest step extends that policy to the underlying assets themselves.
That places Bitcoin and Ether alongside more established collateral types such as Treasuries and gold inside the bank’s broader lending framework, even if the risk profile is higher. The practical issue is no longer whether crypto can be recognized in credit systems, but how those systems adapt to assets that reprice in real time.
Risk management shifts to intraday pricing and custody checks
Samuel Patt, co-founder of OP_NET, said the move reflects changing priorities among institutions. He also said crypto assets create real-time volatility and liquidity issues that do not match the behavior of conventional instruments. Risk teams now need models for intraday price swings and continuous assessments of custodial reliability.
He added that banks may need new controls, including dynamic margining and real-time data feeds. Those tools matter because collateral values can change fast, and lending desks need a way to adjust margin requirements before credit exposure widens.
Large U.S. banks keep widening digital asset services
JPMorgan’s move comes as other major financial institutions widen their own crypto offerings. In July last year, BNY Mellon partnered with Goldman Sachs to launch a tokenized money market product built on its existing custody infrastructure. Morgan Stanley has also confirmed plans to enable crypto trading for retail clients through its E-Trade platform and expand access to crypto funds across several account types.
Across lending, custody, and asset management, large U.S. banks are folding digital assets into existing financial rails. JPMorgan’s decision to take Bitcoin and Ether as collateral shows that the shift is moving beyond listed crypto products and toward the assets themselves.