The US federal banking watchdog signaled a regulatory shift that could fundamentally reshape competition in merchant services across the US.
That shift became apparent today after Bloomberg reported that JPMorgan is exploring crypto trading services for institutional investors, marking one of the clearest indications yet that Wall Street banks are preparing to move beyond experimentation and into execution. CoinDesk contacted JPMorgan, and they declined to comment on Bloomberg’s article.
The report follows a statement from a JPMorgan spokesperson, who previously told CoinDesk that the bank was “digesting and evaluating” recent guidance from the Office of the Comptroller of the Currency (OCC) confirming that national banks can engage in crypto trading services.
The guidance, issued in an interpretive letter from the OCC on Dec. 9, confirmed that financial institutions can facilitate so-called “riskless principal” transactions in cryptoassets, effectively allowing them to broker crypto trades without holding inventory or taking market risk.
The OCC statement suggests the regulator is intent on drawing crypto activity deeper into the regulated banking system and ensuring banks participate rather than sit on the sidelines because, experts say, if they don’t move into crypto trading services now, others will.
“The market consequences will be significant,” said Burçak Ünsal, ÜNSAL Attorneys at Law managing partner. He said that “armed with regulatory legitimacy and the confidence that comes with it, banks are poised to absorb a meaningful portion of retail order flow.”
“Stand-alone crypto exchanges that lack banking licenses will feel competitive pressure, especially in the entry-level consumer segment,” Ünsal added
Banks are already testing the waters
Even before the OCC’s latest clarification, several major US banks had begun laying the groundwork for crypto execution and distribution, often quietly and through intermediaries.
JPMorgan Chase has developed blockchain-based settlement infrastructure via its Kynexis platform and JPM Coin, while also offering crypto-linked products to institutional clients. Goldman Sachs has relaunched its crypto trading desk, offering bitcoin and ether derivatives as well as structured products for hedge funds and asset managers. BNY Mellon launched digital asset custody services for select institutional clients, integrating crypto into their existing custody and settlement stack.
Recently, banks, including Fidelity affiliates and regional lenders, have partnered with crypto market makers and exchanges to provide execution, custody or fiat rails, arrangements that can now be extended to direct brokerage models under the OCC’s interpretation.
“This is a green light for banks to offer crypto brokerage, but not a free pass to run full exchanges or offer every asset to every customer,” said Mati Greenspan, founder of Quantum Economics and former senior analyst at eToro. “Banks can now broker crypto trades, and that means many regular users will prefer to buy their bitcoin from their bank instead of, say, Binance.”
A new competitive dynamic
Crypto sector advocates and market participants largely agree that the OCC’s framework is designed to let banks benefit from crypto activity while minimizing exposure to volatility.
“Allowing regulated banks to facilitate crypto execution gives consumers more confidence and removes friction that has slowed mainstream adoption,” said Ilies Larbi, founder of Ouinex Exchange. “But it also means banks could become dominant distribution channels for basic crypto exposure, putting pressure on retail-focused exchanges whose core revenue comes from spot trading and custody.”
Larbi noted that banks’ ability to perform “risk-free principal” execution gives them a structural advantage. “They can earn fees and provide crypto exposure without holding inventory or taking market risk,” he said.
This dynamic is putting pressure on US-focused retail exchanges such as Coinbase, Gemini and Kraken, according to Keneabasi Umoren, a crypto market analyst and Web3 researcher.
“Wall Street can now legally compete with crypto exchanges in the most profitable, low-risk part of the market,” Umoren said. “It won’t kill exchanges, but it will squeeze US spot trading and custody revenues and push exchanges further into derivatives, DeFi and global markets.”
Kevin Lee, Chief Business Officer at Gate, echoed this view, describing the OCC letter as “validation rather than disruption,” noting that “some volumes that would have gone to standalone platforms will migrate to banking channels over time.”
This will also help the traditional wealth management firms to meet their clients’ demand for crypto-related financial services. “For mainstream retail and wealth management customers, many customers will understandably prefer to transact within their existing banking relationships,” Lee said.
The move follows a recent study by Swiss software firm Avaloq, which found that the traditional wealth sector is under increasing pressure to provide digital assets to wealthy clients.
In the UAE, for example, 63% of ultra-wealthy investors have switched managers or are considering doing so, according to the survey.
Just don’t call them exchanges
Still, many observers expect the banks to move cautiously.
“Banks are likely to focus on a small basket of highly liquid assets, bitcoin, ether and regulated stablecoins, rather than the full range of tokens and products that support crypto-native exchanges,” Gate’s Lee said. “The rollouts will be conservative and incremental.”
While experts called the moment a turning point, they emphasized that the competition is unlikely to be a zero-sum game. Many banks will still rely on crypto-native firms for liquidity, pricing, routing and infrastructure, creating opportunities for partnerships rather than outright displacement.
“Exchanges that are well-capitalized, compliant and global will adapt by running the plumbing,” Lee said, “rather than just competing on the front end for every retail ticket.”
The OCC has not designated banks as crypto exchanges. But it has essentially declared them open to cryptobroking, and in a sector where regulatory credibility is scarce, that alone could prove transformative.
“Wall Street pretty much just got the green light to get on the bandwagon,” said Alex Mavashev, founder of ScalerX. “Banks can now sit in the middle of crypto trades with regulation and trust behind them. This is a real threat to exchange margins.”
