After years of tension between crypto and traditional finance, a symbolic change is taking shape within the world’s largest bank.
JPMorgan Chase & Co. is reportedly preparing to allow institutional clients to use Bitcoin and Ethereum as collateral for cash loans. This means the bank’s borrowers can pledge the top two cryptocurrencies by market capitalization, which would be held by licensed third-party custodians like Coinbase.
The initiative is expected to be rolled out by the end of 2025.
The move is particularly ironic given that the financial giant’s CEO, Jamie Dimon, is a renowned crypto critic. Notably, he has previously described Bitcoin as a “fraud.” However, growing demand from the emerging industry forced him to support his company’s product launches.
A new chapter for digital guarantees
JPMorgan’s move could quietly rewrite the boundaries between digital assets and regulated credit markets.
According to data from Galaxy Research, open centralized financing (CeFi) borrowing totaled $17.78 billion as of June 30, up 15% quarter-on-quarter and 147% year-over-year.
When decentralized lending is included, the total outstanding amount of collateralized crypto credits reached $53.09 billion in Q2 2025. This is the third highest figure on record.
These numbers demonstrate a structural shift in which borrowing activity increases as digital asset prices rise. This results in improved credit spreads, making loans more attractive to traders and treasuries.
Additionally, companies are also using cryptocurrency-backed loans to finance their operations, replacing the issuance of shares with debt secured against digital assets.
In this context, JPMorgan’s entry looks less like an experiment than a decisive institutional move to catch up in the emerging industry.
Given this, crypto researcher Shanaka Anslem Perera estimates the model could unlock between $10 billion and $20 billion in immediate lending capacity for hedge funds, corporate treasuries and large asset managers looking for dollar liquidity without selling their tokens.
In practical terms, this means that companies can now raise capital against digital assets in the same way they would against US Treasuries or blue-chip stocks.
Why JPMorgan’s decision matters
While crypto-collateralized lending is familiar within DeFi protocols and smaller CeFi lenders, JPMorgan’s participation institutionalizes the concept.
The bank’s entry indicates that digital assets have matured sufficiently to meet the compliance, custody and risk management standards of global finance.
Matt Sheffield, CIO of Ethereum-focused treasury firm SharpLink, believes this development could reshape how asset managers and funds’ balance sheets are managed.
According to him:
“Many traditional financial institutions that have so far relied on transactions with banks must choose between holding ETH in spot OR other positions. The world’s largest investment bank is here to change that. With the ability to borrow against positions held by third-party custodians, you can build a more productive portfolio, thereby increasing the value of the collateral asset.”
At the same time, the decision also strengthens JPMorgan’s broader position in crypto. Over the past two years, the bank has developed Onyx, its blockchain-based settlement network, processed billions of tokenized payments and explored digital asset repo transactions.
Accepting BTC and ETH as loan collateral closes the loop: issuance, settlement and credit, which touch all rails of the blockchain.
Given this, Sheffield predicts the move will trigger a “competitive cascade” among big banks. He noted:
“This sets off a wave. Being first is what scares big institutions. Others will follow with a risk-free decision, because no action would leave them uncompetitive.”
Already, competitors like Citi and Goldman Sachs have expanded their digital asset custody and repo initiatives. BlackRock, meanwhile, has integrated tokenized treasuries (BUIDL) into its fund ecosystem, while Fidelity has doubled the headcount of its institutional crypto desk this year.
The road to follow
Despite Wall Street’s growing adoption of digital assets, challenges remain.
Banks entering this market must contend with the inherent volatility of cryptocurrencies, the uncertain treatment of regulatory capital, and persistent counterparty risk, all of which limit how aggressively they can expand cryptocurrency-backed lending.
U.S. regulators have yet to issue clear capital weighting guidelines for digital collateral, forcing institutions to rely on conservative internal models. Even if third-party custodians manage custody risk, prudential supervision should remain intense.
Yet the trajectory is unmistakable as digital assets are gradually integrated into the fabric of global credit markets.
Bitcoin analyst Joe Consoerti said these moves show that:
“The global financial system is slowly rebuilding itself around the highest quality asset known to man. »
