JPMorgan will accept Bitcoin ETFs as collateral for loans: Bloomberg

JPMorgan Chase (JPM) plans to allow its clients to offer cryptocurrency-backed assets such as Bitcoin (BTC) exchange-traded funds (ETFs) as collateral for loans, beginning with BlackRock's iShares Bitcoin Trust (IBIT), Bloomberg reported on Wednesday.

JPMorgan is set to allow BlackRock's IBIT ETF as collateral for loans

JPMorgan Chase will soon allow its trading and wealth-management clients to use crypto-linked assets, such as crypto ETFs, as collateral for loans, according to a Bloomberg report on Wednesday. 

The bank will begin by providing financing against BlackRock's iShares Bitcoin Trust (IBIT), which is expected to start in a few weeks. It added that more crypto ETFs will be included after the changes take effect.

BlackRock's iShares Bitcoin Trust (IBIT) is the largest Bitcoin product, raking in $70.16 billion in assets under management (AUM) since its launch in January 2024. The fund now represents more than half of the total $128.13 billion in assets held across all US spot Bitcoin ETFs, per SoSoValue data.

JPMorgan will also start considering crypto when evaluating the overall net worth and liquid assets of its clients. The changes will apply to all JPMorgan clients worldwide, taking into account the various levels of wealth, whether as retail or high net worth individuals.

The bank previously accepted crypto ETFs as collateral from certain clients, but only on a limited, case-by-case basis, according to Bloomberg.

The latest move indicates a shift toward greater acceptance of crypto among top financial institutions as demand for digital assets increases. It also aligns with JPMorgan CEO Jamie Dimon's statement in May, revealing that the bank will soon permit its clients to buy Bitcoin.

JPMorgan would become one of the largest traditional financial institutions to provide clients with access to Bitcoin-related services. Standard Chartered also introduced digital asset trading services through a partnership with FalconX.  Likewise, Morgan Stanley has been planning to add crypto trading to its E*Trade platform, giving clients access to digital assets.

Meanwhile, US spot Bitcoin ETFs recovered from three days of consecutive outflows after recording inflows of $378 million on Tuesday, according to SoSoValue data.