JPMorgan Embraces Bitcoin ETFs As Loan Collateral: Is TradFi Finally Changing?
JPMorgan‘s (NYSE:JPM) decision to accept Bitcoin ETFs as loan collateral marks a pivotal shift in how traditional finance (TradFi) evaluates cryptocurrency risk and client liquidity, with experts predicting advanced risk models and hybrid analytics to integrate crypto’s unique volatility and 24/7 market dynamics into mainstream financial frameworks.
This policy, set to roll out in the coming weeks, reflects a broader trend of integrating cryptocurrencies into conventional banking systems amid a more permissive regulatory environment under the Trump administration.
Experts highlight that this shift will reshape how banks assess crypto-related risks and client liquidity.
Speaking with Benzinga, Anndy Lian, an intergovernmental blockchain advisor and author, describes JPMorgan’s decision as a “catalyst for change.”
By treating Bitcoin ETFs similarly to traditional securities, banks may develop sophisticated models to evaluate crypto volatility, applying higher risk weights than for stocks.
“Under Basel III, Bitcoin ETFs are treated as stocks, not crypto-assets, allowing better capital treatment, 100% risk-weighted assets (RWA) exposure instead of 1,250% for direct crypto,” Lian explains.
However, banks may charge higher loan rates due to limited capital benefits, as traditional stocks can reduce RWA to zero with a 25% haircut.
Lian notes …
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