JPMorgan Chase, the world's largest bank by assets, is about to make history on Wall Street: in the near future, it will permit clients to utilize units of spot Bitcoin ETFs to start with BlackRock's iShares Bitcoin Trust (IBIT) as collateral for a loan. It is the first time that a leading U.S. bank is welcoming crypto-native collateral on scale, opening up a new era of institutional acceptance of digital assets. How the Program Works: Risk Model and Collateral The JPMorgan move allows both trading and wealth-management clients to access lines of credit using their holdings of Bitcoin ETFs as collateral, with the ultimate aim of expanding beyond IBIT to other ETFs. The policy will apply globally, to retail and institutional accounts. For the first time in history, the bank will also factor crypto holdings into net worth and liquid asset calculations equating digital assets to stocks, property, and pieces of fine art in qualifying for loans. The risk model is conservative: only regulated, liquid ETFs like BlackRock's IBIT meet the cut. The collateral values will be marked to market on a daily basis, and JPMorgan will require healthy loan-to-value ratios, the same way it does for equities. It de-risks but allows clients to leverage their crypto exposure without having to give up their assets. “JPMorgan will begin accepting shares of BlackRock’s iShares Bitcoin Trust (IBIT) as collateral for loans... putting them on par with traditional securities like stocks.” — @CoinDesk Why Now? Wall Street, Politics, and the ETF Boom JPMorgan's U-turn comes as investor and political pressure grows. President Trump's administration easing crypto regulation, and spot Bitcoin ETFs managing a record $128 billion in assets, banks can no longer ignore customer demand for exposure to digital. JPMorgan's famously crypto-skeptical CEO Jamie Dimon recently caved: ”I don't think you should smoke, but I defend your right to smoke. I defend your right to buy Bitcoin.” Wealth management firms are seeing a wave of clients agreeing to use Bitcoin ETF shares to access liquidity, especially as such ETFs like IBIT have surged 138% since their approval by the SEC in January 2024. Feature JPMorgan Goldman Sachs Collateral Accepted Spot Bitcoin ETF shares (e.g., IBIT) Direct Bitcoin holdings, select crypto assets Loan Clients Trading & wealth management, global Institutional (e.g., Coinbase), high-net-worth Risk Controls Daily mark-to-market, conservative LTV, regulated ETFs only 24-hour risk management, direct crypto custody Crypto Integration Scope Net worth/liquidity calculations include crypto ETF holdings Expanding to tokenized assets and blockchain lendingShareExportRewrite The action also puts JPMorgan squarely in contention with Goldman Sachs and Morgan Stanley repo desks, which have now begun adding crypto ETFs to their own trading and lending businesses. Turbocharging ETF Liquidity Through using ETF shares as collateral, JPMorgan can boost spot Bitcoin ETF liquidity and trading volumes. The analysts feel that this would make ETFs even more attractive to institutions considering the reality that clients would be in a position to use their holdings to finance leverage.”. This action is already challenging the difference between mainstream finance and crypto, as Bitcoin Magazine indicates: ”JPMorgan just made Bitcoin ETF shares mainstream collateral.”. The lines between TradFi and crypto are officially blurred.” The sentiment is echoed by fintech analyst Frank Chaparro, who remarked, “Jamie Dimon: ‘I defend your right to buy Bitcoin.’ JPMorgan: ‘We’ll lend against it.’ Wild times.” For many in the industry, this is a clear signal that Wall Street is not just tolerating crypto — it’s actively integrating it into the core mechanics of global finance. The news has also created a furor of discussion among traders and institutional investors. All of them see JPMorgan's action as an accelerator that will turbocharge ETF liquidity and motivate other big banks to join the bandwagon. With assets under management of Bitcoin ETF increasing, the ability to trade these shares as collateral is going to drive more volume, tighter spreads, and increasing usage of crypto-backed financial products. The bottom line: JPMorgan's use of Bitcoin ETF shares as collateral is a watershed moment for both Wall Street and crypto. By satisfying the gap between traditional finance and digital assets, the bank is improving ETF liquidity while opening the door to wider institutional acceptance of crypto as an acceptable financial tool.
