JPMorgan to Offer Client Crypto Trading, Opts for Third-Party Custody

Executive Summary

JPMorgan's digital assets division has confirmed its intention to offer crypto trading services to its clients. This strategic move signals a growing institutional acceptance of digital assets within traditional finance. The bank will utilize third-party custodians for the safekeeping of digital assets, explicitly opting against launching its own custody services at this time. This decision underscores a prudent approach to managing the inherent risks and regulatory complexities associated with direct digital asset custody, while still addressing increasing client demand for exposure to cryptocurrencies.

The Event in Detail

Scott Lucas, JPMorgan's global head of markets digital assets, outlined the bank's approach in an interview, emphasizing an "and" strategy that seeks to balance existing financial infrastructure with the opportunities presented by emerging blockchain technologies. The bank has been actively exploring deposit tokens, such as its JPMD prototype in the U.S., and stablecoins to facilitate cash-like digital assets on distributed ledgers for client services and cash management solutions. Jamie Dimon, CEO of JPMorgan, has acknowledged the bank's involvement in the trading of cryptocurrencies but clarified that direct custody services are not currently on the agenda.

To manage the risks associated with holding digital assets, JPMorgan plans to integrate with third-party custodians, such as State Street. This strategy allows the bank to provide client access to Bitcoin and other cryptocurrencies without directly assuming the security, compliance, and liability concerns of self-custody. This approach is consistent with a complex and evolving regulatory landscape, allowing JPMorgan to focus on transaction facilitation. Earlier in 2025, JPMorgan expanded its embrace of digital assets by allowing clients to use Bitcoin ETFs as collateral and including crypto holdings in net worth evaluations alongside traditional assets. Furthermore, internal research by JPMorgan has suggested that Bitcoin may be undervalued relative to gold, projecting a potential upside to $165,000 based on volatility-adjusted comparisons, especially as the Bitcoin-to-gold volatility ratio falls below 2.0.

Market Implications

JPMorgan's entry into crypto trading is anticipated to bolster investor confidence and potentially enhance liquidity across the cryptocurrency markets. This move is a significant indicator of accelerating mainstream institutional adoption of digital assets. By leveraging third-party custodians, JPMorgan mitigates its direct exposure to the operational and regulatory risks typically associated with direct digital asset management, while still broadening access for its client base. This cautious, yet progressive, strategy is likely to influence future regulatory discussions and frameworks for how traditional financial institutions interact with the crypto ecosystem.

This development parallels broader industry trends, including Morgan Stanley's recent decision to expand access to cryptocurrency investments for all its clients, encompassing retirement plans. These actions collectively reflect increasing client demand for digital asset exposure within established financial channels. While JPMorgan opts for third-party custody, other institutions, such as Citi, are reportedly developing their own crypto custody services for a 2026 launch, highlighting diverse strategic approaches to integrating digital assets into traditional banking operations.

Expert Commentary

Scott Lucas articulated JPMorgan's measured approach, emphasizing the importance of balancing established financial infrastructure with the novel opportunities presented by blockchain technology. The decision to use third-party custodians for digital assets, rather than offering proprietary services, reflects a strategic choice to manage regulatory and security complexities effectively. This allows JPMorgan to facilitate client participation in the crypto market while adhering to a stringent risk management framework.

Broader Context

JPMorgan's move is part of a wider trend where major financial institutions are easing prior restrictions on Bitcoin ownership and exploring deeper engagement with digital assets. The evolving U.S. regulatory environment, characterized by measures such as the GENIUS Act, has contributed to increased institutional confidence in developing crypto-related products and services. Hybrid custody solutions offered by specialist firms like Anchorage and Fidelity are further supporting this institutional shift. Current data indicates that approximately 59% of institutional portfolios now allocate at least 5% to cryptocurrencies, underscoring the growing legitimacy and integration of digital assets into global finance. Pro-crypto regulatory stances, such as those seen under certain administrations facilitating crypto investments in 401(k) plans, have also played a crucial role in enabling broader institutional participation in the digital asset space.