JPMorgan Mulls Crypto Trading Exposure, But Not Custody

JPMorgan Expands Crypto Trading Services, Excludes Custody

Financial giant JPMorgan is taking a pivotal step to expand its presence in the crypto market. The firm has announced its plans to offer crypto trading services to its clients, excluding custody services.

Notably, the bank is exploring blockchain initiatives and the potential of stablecoins. This move marks a significant shift for the TradFi behemoth, which has been cautiously navigating the digital asset space.

JPMorgan to Offer Crypto Trading Services

According to recent reports, JPMorgan is exhibiting a progressive stance on cryptocurrencies, marking a reversal from its previous cynical approach. The firm plans to offer crypto trading services as part of its efforts to expand its blockchain capabilities, but won't be offering direct crypto custody.

In a recent interview with CNBC's Squawk Box Europe, Scott Lucas, JPMorgan's global head of markets and digital assets, stated, “Naturally, we need custodians. So we’re exploring what the right custodians for us for the business footprint of.” He added,

I think Jamie [Dimon] was pretty clear on investor day that we’re going to be involved in the trading of that, but custody is not on the table at the moment…There’s a lot of questions around our own risk appetite and how far we wanna go down that path, from trading and other sides of it, and custody I guess would follow.”

Focus on Stablecoin

Further, the Head explained the platform’s focus on stablecoins, with its payments business likely to take the lead on any future issuance. Meanwhile, the bank's trading clients can leverage stablecoins for transactions and explore new financial processes, showcasing JPMorgan's efforts to integrate traditional finance with blockchain technology.

Lucas expressed enthusiasm for JPMorgan's deposit token, JPMD, which launched in a pilot phase on Base in June, citing its potential to serve institutional clients with features akin to stablecoins. He noted,

“So when it comes to JPMD, I think it’s really exciting, there’s a real opportunity for us to think about how we can offer different services for our clients on the cash side. As well as responding to client demand to do things like stablecoins…And that strategy is still emerging, as you can understand. It’s only really been a few months since we’ve had some more clear regulation around what the opportunity looks like.”

It is noteworthy that the crypto trading announcement coincides with JPMorgan Chase’s strategic plan to invest up to $10 billion directly into selected companies vital to US national security and economic resilience. Under the "Security and Resiliency Initiative,” the bank intends to allocate $1.5 trillion to the sector.