Global banking giant JPMorgan Chase & Co. has announced its plans to allow its institutional clients to use Bitcoin (BTC) and Ethereum (ETH) holdings as collateral for loans by year-end, according to Bloomberg and other reports. 

The move marks a significant shift from JPMorgan’s prior cautious stance on crypto and signals deeper integration of digital assets into traditional financial (TradFi) systems. Tokens pledged will be secured by a third-party custodian, ensuring crypto holdings remain separate from the bank’s balance sheet.

JPMorgan Set to Bridge Crypto and Institutional Finance

JPMorgan’s decision follows years of institutional demand for regulated pathways to leverage crypto assets without selling them. Using Bitcoin and Ethereum as loan collateral offers clients liquidity without triggering taxable events or losing upside exposure. According to the sources, the bank’s program will expand on its earlier move this year to accept crypto-linked ETFs as collateral. 

The announcement also comes amid macroeconomic uncertainty, rising interest in digital asset exposure, and regulatory softening — factors that have made crypto more palatable to large financial institutions. 

The collateral program is designed specifically for institutional clients, not retail users, and aims to give large investors access to traditional bank financing using digital assets as security. Under the framework, a third-party custodian will hold the pledged Bitcoin and Ethereum, ensuring that JPMorgan remains insulated from direct crypto-custody risk. 

The initiative, expected to roll out by the end of 2025, is still pending final internal and regulatory approvals, CoinDesk reported. Once operational, the move will place Bitcoin and Ether alongside traditional collateral classes such as stocks, bonds and commodities within the bank’s lending operations, marking a significant step toward integrating digital assets into mainstream financial infrastructure. 

Institutional Loans With Crypto Could Boost Liquidity 

Allowing crypto as collateral means that institutional holders of Bitcoin and Ethereum can unlock large credit lines without liquidating their holdings. This could lead to increased utilisation of crypto holdings for treasury management and balance-sheet optimisation.

JPMorgan’s shift underscores that digital assets are no longer fringe investments. If one of Wall Street’s largest banks treats Bitcoin and Ethereum as credible collateral, that may influence other banks, custody providers, and asset managers to follow suit.

The news of JPMorgan’s move caused a near-term uptick in asset prices, with Bitcoin climbing above $110K and ETH surging, sparking optimism that the announcement may signal increased institutional demand for Bitcoin and Ethereum. 

However, accepting highly volatile assets like Bitcoin and Ethereum as collateral carries risk, as their value can drop rapidly. As institutional adoption deepens, risk frameworks and regulatory clarity will become key — but the move may well redefine how crypto is used in professional finance.