America’s biggest financial firm is changing its tune on bitcoin.
Originally reported by WSJ, the $2.6 trillion bank will begin offering bank accounts to Gemini and Coinbase cryptocurrency exchanges. Per the banking relationship, which was solidified last month, J.P. Morgan will provide deposit, withdrawal and transferring services for Coinbase and Gemini customers with Automated Clearing House (ACH) infrastructure.
Historically, it has been difficult for cryptocurrency exchanges to secure reliable banking relationships for fear of fraud and money laundering, something that has led them to rely on sketchy payment processors instead.
The news, then, is particularly significant, not just because of J.P. Morgan’s staunch stance against cryptocurrencies in the pas, but because this could open avenues for better banking relationships for Bitcoin companies going forward.
And that could be why J.P. Morgan is taking this chance to entrench itself as a primary player in this esoteric new market, The Block notes in its report; they may not like Bitcoin, but they seen an opportunity to swoop in and score banking relationships in a growing market with upside, one banker told The Block.
“It’s quite significant news in my opinion. There is little business in fees associated with processing wire and ACH payments, I would expect that there are other associated benefits to JPM from any associated banking services, additional collaboration with both of those firms, potential for winning any future IPO or another angle such as JPM coin being offered on either of those platforms.”
(For context, JPM announced it was incubating its own stablecoin at the beginning of last year).
This news comes just days after hedge fund stalwart Paul Tudor Jones revealed he allocated roughly 2% of his fund’s portfolio into bitcoin futures.
At the least, they’re going to sell shovels in the digital gold rush, it seems, and Coinbase and Gemini are just the start of what could be an uptick of institutional interest in providing financial services for Bitcoin companies.
As the anonymous banker told The Block, “the largest bank offering crypto exchange services means a lot of credibility for the space.”