Its CEO once called bitcoin a fraud but now U.S. banking giant JPMorgan Chase has added its first cryptocurrency exchange customers, CoinDesk has confirmed.
Sources told The Wall Street Journal Tuesday the bank signed two popular regulated exchanges – Coinbase and Gemini, the latter founded by Tyler and Cameron Winklevoss.
The fact that both exchanges are regulated in the U.S. was apparently a factor in the approvals, which still took a lengthy period of vetting, the WSJ said. Accounts for the two crypto firms were approved last month, the sources said, and are now in use.
The move by JPMorgan is notable in a nation where banking services are hard to come by for any firms dealing with cryptocurrencies, which are viewed as a high risk by the banking industry. Until now, exchanges and other firms working with digital assets have been served by a few crypto-friendly banking institutions such as Silvergate.
Still, Gemini and Coinbase aren't the first crypto clients for JPMorgan. TokenSoft, a regulated transfer agent and software vendor for security token services, has had an account at the bank since 2017, CEO Mason Borda said on Twitter.
Speaking at CoinDesk's Consensus: Distributed event Monday, U.S. banking regulator Brian Brooks said, "Banks not only have the ability, they have an obligation to serve all lawful businesses. They shouldn't be discriminating because something's a new technology." Brian Brooks was formerly Coinbase's chief legal officer and is now senior deputy at the Office of the Comptroller of the Currency.
"As crypto matures, there are increasingly many companies that have perfectly robust risk management systems and do have an ability to comply with those laws, and they shouldn't have trouble finding bank relationships," he said.
With cryptocurrency firms now accepted by a major bank, it's possible other institutions may follow suit. The traditional finance industry has been becoming more open to the financial technology as it proves a worthy investment at a time when the markets' favorite assets are struggling.
So far this year, bitcoin as up 20%, while the S&P 500 stock index is down 9.3% and oil has fallen 66%. Traditional safe haven gold is up just 11.5% at a time when markets have been reeling from the effects of the coronavirus pandemic.
The WSJ sources said JPMorgan is now providing Coinbase and Gemini's U.S. users with deposits and withdrawals via wire transfer and automated Clearing House (ACH) transactions. It's also helping the exchanges with cash management services, they said.
JPMorgan has also built out its own blockchain settlement service with its own U.S.dollar-backed token, dubbed JPM Coin. Previously a crypto cynic, CEO Jamie Dimon said last year the token "could be internal, could be commercial, it could one day be consumer.”
A JPMorgan spokesperson declined to comment on the news when contacted by CoinDesk.
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