Bitcoin News Today: Wall Street's Crypto Gambit: JPMorgan's Collateral Move Sparks Legacy System Tensions

JPMorgan Chase & Co. is set to allow institutional clients to use Bitcoin and Ethereum as collateral for loans by year-end, marking a pivotal step in the integration of digital assets into traditional finance. The program, which will operate globally and rely on third-party custodians to safeguard the pledged tokens, extends the bank's earlier acceptance of crypto-linked ETFs as loan collateral, according to a Coindesk report. This move positions JPMorgan among a growing list of major financial institutions, including Morgan Stanley, State Street, and Fidelity, that are deepening their crypto offerings, as reported by a crypto.news article.

The decision reflects rising institutional demand for cryptocurrency exposure and aligns with broader shifts in Wall Street's approach to digital assets. JPMorgan's CEO, Jamie Dimon, once a vocal skeptic of Bitcoin, has recently softened his stance, permitting clients to purchase BTC while maintaining that the bank will not custody it, the crypto.news coverage noted. The bank's pivot follows regulatory easing under the current administration and a surge in Bitcoin's price, which has reached record highs in 2025, according to Coindesk.

The new collateral framework will enable clients to leverage their crypto holdings for liquidity without selling assets, potentially boosting demand for BTC and ETH among long-term holders, the crypto.news piece suggested. However, the move introduces unique risks. Unlike traditional assets like Treasuries or gold, cryptocurrencies trade 24/7 and exhibit extreme volatility, which complicates risk management for banks, according to a Benzinga opinion. Samuel Patt, co-founder of Bitcoin metaprotocol OP_NET, noted that integrating crypto into legacy systems creates "fundamental tension," as Bitcoin was designed to eliminate counterparty risk rather than be rehypothecated within traditional finance, as described in a Yahoo Finance article.

JPMorgan's initiative builds on its expanding crypto infrastructure, including its J.P. Morgan Deposit Token (JPMD) and blockchain-based Onyx platform, which processes billions in tokenized transactions, according to a BeInCrypto report. The bank also launched a stablecoin-related trademark in June 2025, signaling its intent to further cement its role in the digital asset ecosystem, the BeInCrypto piece noted. Meanwhile, its Kinexys blockchain network has expanded into carbon markets and cross-border payments, with average daily transaction volumes exceeding $2 billion.

Critics, however, warn of systemic risks. Analysts at Benzinga caution that accepting volatile crypto as collateral could create contagion pathways, as sudden price swings might trigger cascading margin calls and liquidity crises. This concern echoes the 2022 crypto winter, when the collapse of Celsius Network and Terra/Luna triggered $20 billion in losses. JPMorgan's program, while innovative, may exacerbate such feedback loops if not carefully managed.

The bank's shift mirrors a wider industry trend. Swiss banks like Luzerner Kantonalbank, Sygnum, and Swissquote have already adopted similar models, accepting Bitcoin and crypto ETFs as collateral, the crypto.news coverage observed. In the U.S., Goldman Sachs and BNY Mellon have also ventured into crypto-collateralized lending, while Citigroup and U.S. Bancorp are developing custody solutions, according to a Yahoo Finance report. These moves suggest that crypto's integration into traditional finance is no longer speculative but operational.

JPMorgan's decision underscores a pragmatic approach to client demand, even as Dimon continues to voice personal reservations about crypto's utility, the BeInCrypto piece reported. "We are going to have some kind of digital currency at some point," he recently stated, while reiterating that Bitcoin has "no intrinsic value." For now, the bank's actions speak louder than its CEO's rhetoric, signaling that Wall Street's embrace of crypto is accelerating—even as risks remain unresolved.