JPMorgan to Accept Bitcoin and Ether as Collateral for Dollar Loans Using Third-Party Custodians

JPMorgan Chase will allow institutional clients to pledge Bitcoin and Ethereum as collateral for U.S. dollar loans, Bloomberg reported ahead of Friday's market open. The program is designed to broaden the bank's use of digital assets in its credit and lending systems by late 2025, while relying on third-party custodians to handle custody and reduce direct risk. Under the structure described in the report, JPMorgan will not hold the digital assets linked to these loans. Instead, approved custodians will safeguard clients' pledged Bitcoin and Ether, enabling the bank to extend credit lines or structured loans secured by crypto in a framework similar to how equities or bonds are used as collateral. The bank has been expanding its collateral policy in steps. In June, it began accepting crypto exchange-traded funds as collateral; the latest move extends eligibility to the underlying assets themselves. Market participants note that using digital assets introduces operational demands that differ from traditional collateral. Samuel Patt, co-founder of OP_NET, said the shift reflects evolving institutional priorities, but emphasized the need to manage real-time volatility and liquidity risks, including intraday price moves and continuous evaluation of custodian reliability. That typically requires real-time pricing, dynamic margining, and strengthened custody controls. The move also aligns with broader activity across U.S. finance. BNY Mellon partnered with Goldman Sachs in July last year on a tokenized money market product built on existing custody infrastructure. Morgan Stanley has also confirmed plans to enable crypto trading for retail clients through its E*TRADE platform and has expanded access to crypto funds across multiple account types.