JPMorgan Eyes Crypto-Backed Loans in Major Shift Toward Digital Assets

JPMorgan, the world’s largest bank, is reportedly exploring crypto-backed loans, potentially allowing clients to use assets like Bitcoin or Ethereum as collateral to borrow U.S. dollars. This move marks a significant shift for CEO Jamie Dimon, who once criticized Bitcoin as a “fraud” and threatened to fire employees for trading it.

The bank joins a growing list of traditional financial institutions entering the crypto lending space, including Cantor Fitzgerald, which announced a similar initiative last year. JPMorgan's involvement could legitimize and scale the sector more rapidly than its crypto-native counterparts.

Crypto lending totaled $36.5 billion at the end of 2024, down from a $64.4 billion peak in 2021. The market is currently dominated by Tether, Galaxy Digital, and Ledn, which account for 90% of $11.2 billion in outstanding loans (excluding decentralized finance, or DeFi, which adds another $19.1 billion). New entrants like Coinbase, Strike, Xapo Bank, Lava, Onramp, Arch, and Propy are also driving competition.

According to Ledn co-founder Mauricio Di Bartolomeo, increased participation by traditional banks will drive down interest rates. He noted that loans are currently issued at over 12.5% interest with no defaults in seven years, a rate that will likely compress as banks offer more competitive terms.

Di Bartolomeo also emphasized the global appeal of crypto-backed loans: unlike physical gold, Bitcoin is uniform and borderless, allowing for consistent underwriting standards worldwide. JPMorgan’s entry could help make crypto-collateralized lending as commonplace as home equity or personal credit lines.

As legacy banks dive deeper into digital assets, the financial industry inches closer to a global, crypto-enabled credit market.