Bitcoin News Update: JPMorgan's Use of Crypto as Collateral Transforms the Financial Landscape of Digital Assets

JPMorgan Chase & Co. is preparing to transform its lending business by enabling institutional clients to use

(BTC) and (ETH) as loan collateral by the close of 2025, representing a major move by a leading traditional bank to bring digital assets into the mainstream, according to a . This global initiative will utilize independent custodians to safeguard the pledged cryptocurrencies, addressing custody concerns and highlighting the increasing acceptance of crypto as a legitimate financial instrument, as detailed in a .

This initiative expands on JPMorgan's previous acceptance of crypto-related exchange-traded funds (ETFs) as collateral, such as BlackRock's iShares Bitcoin Trust (IBIT), and now moves directly to using the cryptocurrencies themselves as security, as mentioned in

. The bank's institutional asset management division, which manages $4 trillion in assets, has been gradually incorporating crypto into its offerings, including launching its proprietary blockchain payment system, Kinexys, and a token similar to a stablecoin called JPMD, according to a .

This strategy mirrors a broader shift on Wall Street, where firms such as Morgan Stanley, Fidelity, and State Street are also expanding their crypto services amid a more favorable regulatory climate under the Trump administration, as reported by

. JPMorgan's change in direction comes after years of skepticism from CEO Jamie Dimon, who previously labeled Bitcoin as a "hyped-up fraud" and a "pet rock." Nonetheless, the bank's blockchain division has grown, piloting decentralized solutions for interbank settlements and tokenized deposits, indicating a practical change in approach, according to a .

The impact of this program on the crypto sector could be substantial. By allowing institutions to secure loans with their

and assets without liquidating them, could unlock significant liquidity, reducing the likelihood of forced sales during market downturns and helping to stabilize prices, according to a . Experts predict this could create $10–20 billion in lending capacity for hedge funds and corporate treasuries, further establishing crypto as a credible asset for managing balance sheets, as discussed in a .

Importantly, this development matches the rising appetite among institutions for crypto exposure. Bitcoin's impressive price gains this year, reaching a peak of $126,038 in 2025, have fueled adoption, with leading asset managers adding crypto-related products to their portfolios. JPMorgan's move into crypto-backed lending may spark a "competitive cascade" among major banks, with competitors like Citi and Goldman Sachs ramping up their own custody and repo services, as noted in a

.

Nevertheless, there are still hurdles to overcome. The inherent volatility of BTC and ETH, along with ongoing regulatory ambiguity regarding capital requirements for digital collateral, means banks must carefully manage risk. However, JPMorgan's use of external custodians and conservative loan-to-value ratios (estimated at 50–70%) helps to mitigate some of these concerns, as highlighted in a

.

The announcement was met with a positive market response, with Bitcoin surpassing $110,000 and Ethereum rising 3% to nearly $4,000 in the days after the news, according to a

. Institutional investors have long sought regulated ways to leverage crypto assets while maintaining liquidity, and JPMorgan's new program addresses this need .

As the largest bank in the United States by assets, JPMorgan's decision to accept crypto as collateral could reshape how digital assets are viewed in credit markets. By placing BTC and ETH on par with traditional securities such as stocks and bonds, the bank is hastening the integration of crypto into the global financial landscape—a transition many analysts believe is unavoidable.