JP Morgan to Enable Clients to Buy Crypto Without Providing Custody Services

JPMorgan Chase customers will soon be able to purchase cryptocurrencies through the bank, though the institution won’t hold the digital assets itself, according to an announcement from CEO Jamie Dimon. The move represents a significant shift for the banking giant, whose chief executive has previously been openly skeptical about cryptocurrencies. “We are going to allow you to buy it,” Dimon said at the bank’s annual investor day on Monday. “We’re not going to custody it. We’re going to put it in statements for clients,” according to CNBC.

The announcement marks an evolution in Dimon’s stance, who famously described Bitcoin as “a hyped up fraud, a pet rock” in 2023. Despite his personal reservations, Dimon acknowledged client demand, stating: “I don’t think you should smoke, but I defend your right to smoke. I defend your right to buy bitcoin.” JP Morgan’s decision follows similar moves by competitors in the financial sector. Goldman Sachs has already ventured into cryptocy offerings, while Morgan Stanley recently announced plans to provide crypto services, with its subsidiary E-TRADE also exploring cryptocy offerings.

The brokerage sector has shown interest as well, with Schwab backing institutional crypto trading venue EDX Markets and planning to offer crypto to investors pending regulatory changes. Meanwhile, Robinhood continues to generate significant profits from cryptocy trading. JP Morgan’s decision not to provide custody services raises questions about who will safeguard clients’ digital assets. Until recently, U.S. banks were unable to provide crypto custody due to SAB 121 restrictions. Despite being a world leader in blockchain development, JP Morgan’s choice to sidestep custody is notable given other banks such as BNY and Standard Chartered view it as an opportunity.

The bank will likely select a custody partner. It will need to choose between established crypto startups like Coinbase, Anchorage Digital, Paxos, BitGo, or Ripple Custody; institutional-founded startups such as Zodia Custody and Komainu (though these lack a strong U.S. footprint); or major banks such as BNY. The risk of providing custody is highlighted by the recent losses by Coinbase customers following data theft by customer support operatives that was subsequently used for social engineering. While crypto startups bring specialized experience, traditional financial institutions like BNY offer substantially larger security budgets. However, competitive dynamics complicate matters, as BNY remains a direct JP Morgan competitor.