Key Takeaways:
- JPMorgan plans to offer crypto-backed loans using Bitcoin and Ethereum as collateral, marking a major shift in traditional finance.
- The move follows the passage of the GENIUS Act, which provides regulatory clarity for stablecoins and tokenized assets.
- Crypto lending demand is surging, with over $39 billion in active crypto-backed loans globally, drawing major banks into the space.
The lines between crypto and traditional finance are blurring fast. JPMorgan Chase, the largest bank in the U.S., is preparing to expand its offerings by allowing select clients to borrow against Bitcoin and Ethereum holdings, a move that signals a dramatic shift in Wall Street’s stance on digital assets.
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JPMorgan’s Bold Shift into Crypto-Backed Lending
Reportedly, JPMorgan is currently working on a crypto-collateral lending program, according to which high-net-worth and institutional customers will borrow cash also against their BTC or ETH holdings. Although the bank has already launched loans with spot Bitcoin ETFs such as Bitcoin Trust by BlackRock, this is the first step that comes directly with real crypto assets serving as collaterals to loans.
The undertaking, subject to regulatory approval, may roll out as soon as 2026, people familiar with the matter said. That would make JPMorgan among the first major U.S. banks to enter the business of lending cash for crypto trades directly, a space dominated in the past by now-defunct firms such as Celsius and Genesis.
Read More: JPMorgan Opens Bitcoin Access to Clients Amid $42B Crypto ETF Surge but with a Catch
Regulatory Tailwinds: GENIUS Act Unlocks Institutional Demand
Stablecoin Law Paves the Way for Bank-Led Crypto Credit
The bank’s renewed push into digital assets comes just days after the GENIUS Act was signed into law on July 19, introducing a clear framework for stablecoins and crypto-backed financial instruments. The law includes:
- Reserve requirements for stablecoin issuers
- Oversight by the U.S. Federal Reserve
- Enhanced compliance for tokenized financial products
This regulatory clarity is crucial. That enables banks including JPMorgan to develop crypto-linked products such as lending against digital assets within legal structures, not the legal grey areas that have previously stifled innovation.
In addition, ETF lending is already seen as less risky under current capital rules, providing an easier on-ramp. That said, JPMorgan’s willingness to lend against onchain assets (BTC, ETH) should indicate a readiness to take on trickier questions along the lines of custody, liquidation mechanics and smart contract enforceability.
Demand for Crypto Lending Rebounds Strongly
The market for crypto-backed loans is growing rapidly. According to Galaxy Research, total outstanding crypto-collateralized borrowings across centralized and decentralized platforms exceeded:
- $31 billion in March 2025
- $39 billion as of July 2025, when stablecoin-backed loans are included
This rebound from a $9.6 billion low in late 2022 reflects a revived appetite for crypto lending, both from retail and institutions after high-profile collapses in the sector.
JPMorgan entry is not only a fad thing. It is all about tapping onto institutional demand that likes regulated parties as opposed to offshore or non-bank substitutes. This service helps the bank become the first traditional financial institution that will help its clients to extract liquidity without having to sell their crypto assets.
Dimon’s Evolving Crypto Stance: From Skeptic to Strategist
In 2017, long-time CEO of JPMorgan Jamie Dimon famously labelled Bitcoin a fraud and threatened to fire any of the employees who traded in it. However, his tone is different now.
Dimon also recently recognized the validity of stablecoins and tokenized deposits, and this appears to be an indicator that the bank was now willing to join in, but not in the world of speculation, but in crypto infrastructure.
JPMorgan already made an investment in Onyx, its blockchain-based system of wholesale payments, as well as supported regulated digital asset rails. Crypto-collateralized loan program is the next step in this path of providing this infrastructure to capital markets.
Technical Hurdles: From Custody to Liquidation Protocols
Although the plan seems to be bright, implementation is not easy. Lending of Direct to crypto such as Bitcoin and Ethereum subject’s major operational difficulties:
- Custody & Key Control: JPMorgan is unlikely to self-custody client crypto. Instead, it will rely on regulated third-party custodians like Coinbase Prime or Anchorage Digital.
- Collateral Valuation: Crypto’s volatility requires real-time margining protocols and safeguards to prevent overexposure.
- Default Scenarios: In the event of borrower default, the bank must have the ability to seize and liquidate crypto assets, possibly via automated smart contracts or escrow enforcement.
- Legal Enforceability: The treatment of digital assets under U.S. bankruptcy law remains murky, particularly in cases of secured lending and asset recovery.
Still, JPMorgan’s experience in structured finance and risk management puts it in a strong position to navigate these obstacles, especially as market infrastructure for institutional crypto finance matures.
Banking Industry Follows Suit
JPMorgan isn’t alone. The GENIUS Act and rising crypto demand are triggering a domino effect across the U.S. banking sector:
- Bank of America is exploring tokenized deposit products and stablecoin-linked remittance rails.
- Morgan Stanley is considering crypto trading integrations through its E*Trade division.
- Citibank is investing in blockchain custody and digital asset compliance solutions.
This trend reflects a broader realization that crypto is not going away, and legacy financial institutions must adapt or risk irrelevance.
