JPMorgan has finally opened its doors to cryptocurrency exchanges. This comes after years of bank pushback. Despite the vetting process being a lengthy one, the sentiment on Wall Street seems to be changing.
JPMorgan Crypto Sentiment Changes
According to a recent report by the Wall Street Journal, JPMorgan has on boarded cryptocurrency exchanges, Coinbase and Gemini. The approval for the cryptocurrency exchanges came to fruition in the last month or so. JPMorgan has shifted sentiment on the digital asset space the last few years. In 2017 when cryptocurrencies were experiencing massive hype, JPMorgan CEO, Jaime Dimon told the public that “Bitcoin is a fraud that will eventually blow up.” Only a few years later, JPMorgan is now extending its banking services to some of the largest cryptocurrency exchanges in the world. In addition, JPMorgan has been working on its digital currency, “JPM Coin” to fuel payments between institutional clients.
Milestone For The Cryptocurrency Exchanges
The recent news regarding Coinbase and Gemini is extremely positive for the industry. Digital asset companies have been struggling for years due to regulatory pressures. This has forced them to work with smaller players in the industry such as Silvergate Bank, which is believed to be working with 500+ cryptocurrency entities. Banks are starting to feel pressures from many FinTech firms globally that are gladly extending their services to the crypto industry. It appears that JPMorgan has finally applied the proper due diligence to onboard cryptocurrency exchanges.
If we go back just a year ago, it was reported that one of the oldest cryptocurrency exchanges, Kraken had all sorts of issues with JPMorgan. The exchanges CEO, Jesse Powell was quoted in 2019 stating that they "basically had to employ the arts of a money launderer to survive" after JPMorgan Chase and Bank of America Corp. closed the exchange's payroll account on short notice. Since 2019, it appears that JPMorgan has adjusted, in terms of applying the appropriate approval framework for cryptocurrency exchanges.
What Could Change?
With JPMorgan starting to offer banking solutions to Coinbase and Gemini, you could see more opportunity for retail clients. For the last many years, retail clients at banks like JPMorgan have had a difficult time purchasing cryptocurrency. Some clients have been fine, while others have seen their credit and debit transactions get blocked. For card holders experiencing success, JPMorgan was applying high interest charges/fees to cryptocurrency purchases. It was reported that JPMorgan clients were experiencing rates as high as 30% on cryptocurrency purchases. According to the report, the client in question stated he was using Coinbase. According to him,
“Mr. Tucker said in his complaint that he routinely made purchases of cryptocurrency through Coinbase, the largest U.S. cryptocurrency exchange, and other exchanges on his credit card and would pay them off by the end of the billing cycle without incurring finance charges. He said he and other credit card holders were “duped.”
JPMorgan Chase at the time was doing everything in their power to mitigate credit card use for Crypto. This later resulted in lawsuits for the banking giant. With the due diligence that JPMorgan must have done to onboard these exchanges as clients, one could argue that this changes the narrative. The bank now has the ability to monitor the exchange. This could give JPMorgan more leverage in terms of offering models for their retail clients.
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