The Financial Times reports that JPMorgan, the world’s largest bank, is investigating to issue crypto-backed loans, which means its clients may soon be able to lift Bitcoin, Ether or another token to borrow dollars.
The news is remarkable for a few reasons. Crypto -people love to point out that Jamie Dimon, the bank’s CEO, said in 2017 that he would fire any employee who was trapped in Bitcoin to be “stupid”, so Jpmorgan, considering the issuance of such a product (and being involved in stableecoins) is seen as justification of some in the industry.
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More interesting is what JPMorgan’s movement could end up having Crypto lending. The Bank of Dimon is not the first tradfi company to investigate crypto-backed loans (Cantor Fitzgerald announced a similar program last July), but it is definitely the largest.
At the end of 2024, the crypto lending market was $ 36.5 billion, 43% down from its tops of $ 64.4 billion. The lending sector was dominated by Tether, followed by Galaxy Digital and LEDN. Together, the three companies accounted for 90% of $ 11.2 billion outstanding loans (excluding defi, where they saw $ 19.1 billion in loans in 20 applications and 12 blockchains).
I’m sure these numbers need updating, considering how many Crypto native companies have announced their entry into the market since Da-Coinbase, Strike, Xapo Bank, Lava, Onramp and Arch and even Real Estate Focused Propy, to name a few.
The growth in the sector is great for consumers because it will force interest on crypto-backed loans to fall significantly, Mauricio di Bartolomeo, co-founder of Bitcoin lender Ledn, told Coindesk in an interview back in April.
“It’s a seller’s market right now,” he said. “We lend dollars fully collateralized by north of 12.5%, with Nultab over seven years. Banks will look at this and say ‘wow, this is a big return.’ A bank will come in with 12%interest.
Down on the line, such loans could become competitive with home capital or personal credit lines, DI Bartolomeo said. Even better, the rates would not only fall in Western countries with efficient banking systems, but across the globe.
“Gold in a vault in Switzerland is not gold in a vault in Venezuela, but Bitcoin in Colombia is Bitcoin in Madrid is Bitcoin all over the world. As an insurance company, I have uniform collateral,” said Di Bartolomeo.
JPMorgan’s foray into the sector takes us one step closer to meeting this vision.
