US banking giant JPMorgan Chase has reportedly started providing banking services to companies in the cryptocurrency sector.
JPMorgan Opens Door to Bitcoin Businesses
JPMorgan Chase, one of the largest banks in the United States and the world, has opened its doors to companies operating in the Bitcoin and cryptocurrency sector. The bank reportedly started with two customers, cryptocurrency exchanges Coinbase and Gemini. In a twist of events, JPMorgan also recommended investors to consider having cryptocurrencies in their investment portfolios, with CEO Jamie Dimon changing his mind about Bitcoin.
In a report on Tuesday by a popular news house, the Wall Street Journal, it stated that Coinbase and Gemini Trust Co. have become banking customers of JPMorgan Chase, with the publication citing people familiar with the issue. The reported added that JPMorgan approved the two cryptocurrency companies in April, and they are now processing transactions on behalf of the exchanges. At the moment, the bank is mostly providing cash-management services to these crypto entities. JPMorgan is handling dollar-based transactions for its customers in the United States. The transactions include deposits and withdrawals, which are conducted via the Automated Clearing House network, as well as wire transfers.
Most customers on the two cryptocurrency exchanges link their bank accounts to their cryptocurrency exchange wallets, which means a payment processor is required to handle cash transactions to and from those bank accounts. At the moment, JPMorgan does not offer the handling of Bitcoin or crypto transactions for the exchanges.
JPMorgan Changing its Stance on Bitcoin
The acceptance of Coinbase and Gemini bank accounts might be a sign that JPMorgan is warming up to Bitcoin. It is no secret that banks and other large financial institutions are reluctant to offer banking services to cryptocurrency companies. Coinbase and Gemini had to endure a strict vetting process before they got approval from JPMorgan. It likely helped them that both Coinbase and Gemini are regulated cryptocurrency exchanges. Gemini currently operates under the regulation of the New York State Department of Financial Services (DFS), while Coinbase is recognized as a monetary service company by the Financial Crimes Enforcement Network (FinCEN) and it holds a BitLicense from the DFS.
The acceptance of Coinbase and Gemini by JPMorgan could be followed by other regulated cryptocurrency companies. Also, other major banks in the country could start opening their doors to more cryptocurrency entities.
JPMorgan had always had a stern outlook towards Bitcoin, with CEO Jamie Dimon, one of the most prominent critics of the cryptocurrency, making his opinions very clear. In 2017, he called Bitcoin a fraud, predicting that the cryptocurrency would eventually blow up. He believed that Bitcoin was worse than Tulip and that it would not end well, with many people getting hurt in the process. However, a few months afterwards, he told CNBC that he regretted making those remarks regarding Bitcoin.
The bank also launched its digital currency called the JPM Coin. It is a digital currency that helps make instant payments using blockchain technology. The research team at JPMorgan advised investors that cryptocurrencies should be in their portfolio due to the rise in the prominence of cryptos. It is clearly evident that the cryptocurrency sector is gaining more mainstream adoption, as more people recognize cryptocurrencies as excellent investment assets.