JPMorgan Dives Into Crypto Collateral: Bitcoin & Ethereum-Backed Loans Now on the Table
Wall Street's sleeping giant just woke up to DeFi's killer app—and they're bringing their own spreadsheet.
Banking meets blockchain (with a side of irony)
JPMorgan—the same institution whose CEO once called Bitcoin 'worthless'—is now quietly building infrastructure to accept it as loan collateral. The ultimate hedge? A $13 trillion bank covering its bets by playing both sides of the crypto war.
How it works (if you trust traditional finance)
Forget decentralized lending protocols. JPM's version involves KYC forms, 90-day approval cycles, and enough legal docs to crash an Ethereum node. But for institutions? This is the Trojan horse that could legitimize crypto collateral at scale.
The fine print they won't highlight
Expect loan-to-value ratios tighter than a banker's collar during an SEC investigation. And that 'Ethereum' support? Probably means ETH—not your degenerate degen DeFi tokens.
One step closer to the inevitable future where banks repackage crypto loans into CDOs—because 2008 was too long ago for institutional memory.
The Bitcoin play
Mahidhar said Bitcoin's performance justifies institutional interest.
"If you compare the Sharpe ratio of Bitcoin over the last 4 years to the Sharpe ratio of S&P 500, Bitcoin has been higher, showing better risk-adjusted returns," he said.
The Sharpe ratio measures an investment's return relative to its risk, with higher ratios indicating better risk-adjusted performance.
“The risk-adjusted part makes it interesting,” he said, given Bitcoin has a history now similar to “most large cap equities, as well as market cap beating most large cap equities.”
While still subject to change, the effort would expand JPMorgan’s crypto footprint beyond exchange-traded products to the underlying assets themselves.
A JPMorgan spokesperson recently confirmed to Decrypt that the bank will accept crypto ETF shares, such as BlackRock’s iShares Bitcoin Trust, as loan collateral.
"ETFs are the first step for institutions to dip their toes in crypto investments," Krishnendu Chatterjee, CEO & co-founder of A2ZCryptoInvestment, told Decrypt. "Next, they would directly buy and own the underlying crypto, with regulated custodians.
“Banks will jump at the chance to acquire a custodian license where available, by either building the wallet infrastructure from scratch or partnering with existing wallets,” he said.
Recent regulatory changes may ease certain constraints, following President Trump's signing of the GENIUS Act into law last week, which establishes federal frameworks for stablecoin issuance and trading.
The legislation has encouraged banks previously hesitant to engage with digital assets.
JPMorgan has separately expanded its own stablecoin development, with Dimon saying earlier this month that the bank would be "involved in both JPMorgan deposit coin and stablecoins to understand it, to be good at it."
Meanwhile, rival Morgan Stanley is weighing crypto trading through its E*Trade platform, while Citigroup CEO Jane Fraser confirmed the bank is "actively exploring" a Citi-branded stablecoin for cross-border payments.
And just this week, Western Union CEO Devin McGranahan pointed to the shifting sentiment, telling Bloomberg on Monday his company sees stablecoins "really as an opportunity, not as a threat" for cross-border payments and currency conversion.
