JPMorgan is expanding into institutional crypto via tokenization, deposit tokens and plans to accept Bitcoin and Ethereum as loan collateral, moves analysts say will enlarge the addressable market for crypto-native firms.
JPMorgan is reportedly exploring institutional crypto trading — including spot and derivatives — under a regulatory backdrop that the Office of the Comptroller of the Currency clarified on 9 Dec. 2025 by endorsing so‑called riskless principal transactions for banks. Riskless principal is a brokerage model that executes client trades without the broker carrying inventory or market risk.
The bank has also launched MONY, a tokenized money‑market fund seeded with $100 million on Ethereum, and introduced JPMD, a deposit token issued on Coinbase’s Base blockchain to streamline institutional payments.
Separately, JPMorgan plans to allow institutional clients to post Bitcoin and Ethereum as collateral for loans by year‑end 2025, building on an existing practice of accepting crypto ETFs as eligible collateral.
Analysts argue JPMorgan’s moves will legitimize crypto for more institutions, enlarging distribution channels that crypto‑native platforms can serve. Owen Lau of ClearStreet said the bank’s entry “will further legitimize crypto and increase distribution channels,” creating a domino effect that benefits exchanges providing custody and execution.
What JPMorgan is building and why it matters
Coinbase gains direct infrastructure demand: JPMD’s deployment on Base channels institutional flows through Coinbase’s ecosystem and reinforces Coinbase Prime’s potential role in trade execution and custody.
Bullish is positioned to capture institutional volume with a low‑fee, institutionally focused offering; some analysts project Bullish could take roughly 8% of the U.S. institutional spot market by 2027 and see revenue rising toward $377 million, a catalyst noted by Ed Engel of Compass Point.
Banks’ regulatory legitimacy and client trust could pull significant retail order flow and low‑risk spot trading toward traditional institutions, a competitive headwind flagged by analyst Keneabasi Umoren.
That pressure is prompting crypto‑native firms to pivot into “plumbing”: providing custody, liquidity, pricing, routing and derivatives execution for institutional counterparties rather than competing exclusively for retail market share.
The shift favors platforms with deep liquidity pools and compliance credentials — and increases demand for derivatives and risk‑management tools from institutional clients.
