Once one of the most anti-crypto big banks out there, now JP Morgan have taken on both Coinbase and Gemini as new clients
JP Morgan has taken on two Cryptocurrency exchanges, Coinbase and Gemini, as new clients, according to the Wall Street Journal. While the agreement appears to have been reached in April, the timing of it around the halving, and the current global economic crisis, is interesting.
The move itself is surprising to many, considering how anti-crypto JP Morgan have been for the past few years. The bank’s CEO, Jamie Dimon, has been one of Bitcoin’s most vocal critics.
In 2017 he referred to Bitcoin as a ‘fraud’ and he also made it clear that any of his employees caught trading the cryptocurrency would be fired. Yet now, his bank has taken on two of America’s largest crypto exchanges as clients.
A few factors make this move seem more understandable, the first being the nature of the relationship between the exchanges and JP Morgan. The bank will not be processing crypto exchange transactions at all. In fact, what both Coinbase and Gemini will be primarily using JP Morgan for is their Automated Clearing House. This will facilitate their customers’ deposits and withdrawals via wire transfers.
Secondly, it is important to understand that both Coinbase and Gemini are among the most well regulated crypto exchanges in America. Therefore this should not be viewed as the start of a tide of new relationships between other big banks and crypto exchanges.
To obtain the licenses that they both possess is not an easy matter and it is not something that will happen overnight with other exchanges. Without these official licenses it is hard to see other banks taking on other exchanges.
Whilst it is easy to qualify this agreement in terms of the limit of its scope, its importance in setting a precedent should not be overlooked. It is always easier to do something once you’ve seen someone else do it.
The fact that JP Morgan was so openly opposed to Bitcoin but has now entered into agreements, albeit limited ones, with exchanges whose main business is Bitcoin, makes it all the more palatable for other banks to do so.
Finally, it is important to help legitimise the idea of cryptocurrency in the eyes of many investors who place a lot of stock in what big banks such as JP Morgan have to say. To be able to say ‘JP Morgan’ and ‘Cryptocurrency Exchange’ in the same positive sentence is not something many people thought they would hear any time soon.