JPMorgan Chase is preparing to accept Bitcoin and Ethereum as collateral: what will change in the market

JPMorgan Chase, the world’s largest banking corporation, is preparing to take a major step toward integrating cryptocurrency into the traditional financial sector. According to Bloomberg, by the end of the year, the bank will allow its largest clients to use Bitcoin and Ethereum as collateral for loans. This decision reflects the growing demand from corporate investors for digital assets and opens a new phase of interaction between the banking industry and the crypto market.

How the new collateral scheme will work

JPMorgan plans to launch the program with a third-party custodian service. This service will hold clients’ crypto assets as collateral. This will allow the bank to:

• provide credit lines or individual loans secured by cryptocurrency;
• mitigate risks by avoiding direct custody of digital assets;
• manage credit and market risks without having to implement its own crypto-custodial technologies.

Earlier in June, the bank attempted to enter the crypto lending space by accepting Bitcoin ETF shares as collateral. However, the new program offers a more flexible mechanism: clients will be able to pledge actual cryptocurrencies rather than derivatives, which is especially important for institutions unwilling to sell assets for liquidity.

Criticism and Controversy: Community Opinion

Not all industry representatives unanimously support JPMorgan’s initiative. Samuel Patt, co-founder of the Bitcoin metaprotocol OP_NET, believes that the bank’s interest in cryptocurrencies is driven by inevitable pressure from clients. According to him, this creates a fundamental conflict: Bitcoin was originally created to eliminate counterparty risks, but is now being used as collateral in the system he sought to transform.

Patt also notes that integrating Bitcoin into traditional banking processes will complicate risk management. Unlike bonds, Bitcoin operates 24/7, is highly volatile, and requires real-time liquidity control. JPMorgan’s risk department must now consider parameters unfamiliar to traditional financial instruments.

Market Expectations and Forecasts

Despite the controversy, institutional investor interest continues to grow. JPMorgan analysts recently stated that the price of Bitcoin could reach $165,000 by the end of the year, given increased demand from companies seeking to protect their assets from inflation and economic uncertainty.

The launch of cryptocurrency-backed lending could be a significant driver of market liquidity and a new stage in the institutionalization of Bitcoin and Ethereum.