JPMorgan Chase & Co. has reportedly started to accept clients from the cryptocurrency industry. The Wall Street Journal reported on Tuesday that two prominent bitcoin exchanges, Coinbase Inc. and Gemini Trust Co., have become banking customers of JPMorgan Chase, citing people familiar with the matter.
JPMorgan Chase has reportedly started providing banking services to bitcoin businesses, with the first two clients being Coinbase and Gemini exchanges. JPMorgan also recently recommended having cryptocurrency in investment portfolios as its CEO, Jamie Dimon, changed his mind about bitcoin.
JPMorgan Chase’s Bitcoin Clients
The two bitcoin exchanges’ accounts were approved in April and transactions are just starting to be processed, the publication added. JPMorgan Chase is mainly providing cash-management services to the exchanges. It is handling dollar-based transactions for their U.S.-based customers, including processing deposits and withdrawals, through the Automated Clearing House network, and wire transfers.
Many customers of Coinbase and Gemini link their bank accounts to their cryptocurrency accounts so a payments processor is required for handling cash transfers to and from those bank accounts. The services JPMorgan offers do not include handling bitcoin or crypto transactions for the exchanges.
JP Morgan Chase CEO Jamie Dimon used to call bitcoin “a fraud” but later regretted it. Now, his bank has reportedly accepted two bitcoin exchanges, Coinbase and Gemini, as clients.
JPMorgan Warming up to Bitcoin
Large financial institutions are often reluctant to provide banking services to cryptocurrency businesses. Coinbase and Gemini had to go through a long vetting process to get JPMorgan Chase’s approval, which likely took into account the fact that both are regulated bitcoin exchanges in the U.S. Gemini holds a trust charter from the New York State Department of Financial Services (DFS) while Coinbase is registered as a money services business with Financial Crimes Enforcement Network (FinCEN) and also holds a Bitlicense from the DFS. Both are licensed as money transmitters in multiple U.S. states.
JPMorgan Chase CEO Jamie Dimon used to call bitcoin “a fraud”, predicting in September 2017 that the cryptocurrency would eventually blow up. “It’s worse than tulip bulbs. It won’t end well. Someone is going to get killed”, Dimon was quoted by CNBC as saying. However, less than five months later, he told the news outlet: “I regret making” those bitcoin remarks.
Furthermore, JPMorgan has launched its own digital currency called the JPM Coin, which is “a digital coin designed to make instantaneous payments using blockchain technology”, its website details. The JPMorgan research team also recently advised in a report that cryptocurrency should be in a portfolio.
Wall Street Firms Advise Clients Against Investing in Crypto, Says Wealth Manager
JPMorgan Chase and Goldman Sachs are advising their clients against Bitcoin, according to one American wealth manager.
Adam Pokornicky, chief operating officer at Digital Asset Investment Management (DAIM), a U.S.-registered investment advisor for digital assets, claimed that his firm almost lost a client due to the banks’ intervention.
In an interview with Cointelegraph, Pokornicky described his client as a lawyer and a “high net worth individual”, adding that they’ve been acquainted for a long time. “He’s both a friend and someone I’ve worked with over the years”, the wealth manager explained.
According to Pokornicky, his client was ready to buy a minor amount of BTC for his portfolio, but had a sudden change of heart after talking to advisors from JPMorgan and Goldman Sachs. “For him going from wanting to buy 1 Bitcoin to him not being interested means he was talked out of it”, said Pokornicky, whose attempts to get more context have been unsuccessful. “I still don’t know what was said to him”.
Banks’ love-hate relationship with crypto
The wealth manager argued that Wall Street institutions tend to advise against crypto as per their company guidelines:
“My partner and I both worked on the buy side at a Hedge fund and/or Trading for most of our careers and we have an inordinate amount of wall street friends and colleagues that still work at big banks like Morgan Stanley, Goldman, JPM, Wells Fargo, Merrill/BofA who are completely restricted from buying Bitcoin or have to go through insane compliance hoops to do it. The advisors that work for the Wealth Management divisions have a HARD NO Bitcoin policy.”
JPMorgan’s public relationship with cryptocurrencies have been complex. The bank’s CEO Jamie Dimon is a renowned Bitcoin naysayer who went from saying that he “doesn’t really give a shit about Bitcoin” to launching JPM Coin, a stablecoins-inspired digital asset.
Goldman Sachs has entered the industry a while ago, having invested in a number of key projects like payments application Circle and cloud-based supply chain company Tradeshift.
When asked whether he managed to pursue his client to get into Bitcoin after all, Pokornicky replied:
“No not yet. My sense is he’ll come around, most likely at higher prices. They usually all do eventually.”
JPMorgan and Goldman Sachs did not immediately respond to Cointelegraph’s request for comment.