In brief
- JP Morgan has approved banking accounts for crypto exchanges Coinbase and Gemini.
- The exchanges are the bank's first crypto customers.
- The news will be encouraging for crypto businesses seeking banking services.
JPMorgan has extended its banking services to popular cryptocurrency exchanges Coinbase and Gemini, according to people familiar with the matter, who spoke to the Wall Street Journal. The exchanges will be the bank’s first cryptocurrency clients.
Reported today, the landmark move is a sign that Wall Street is gaining confidence in the cryptocurrency industry, but banking requirements could still be overly exacting for many crypto businesses struggling to acquire accounts.
Coinbase and Gemini had to jump through multiple hoops to gain JPMorgan’s approval, the sources said, emphasising the degree to which the exchanges have become regulated entities.
“The fact that both are regulated by multiple parties played a big part in the approval process,” they told the WSJ.
Winklevoss-owned Gemini moving forward with Europe expansion
From the time it opened in 2015 until this spring, Gemini had only ever offered a few popular and time-tested coins: Bitcoin, Bitcoin Cash, Ethereum, Litecoin, and Zcash. Then, this year, the exchange nearly doubled its dollar-crypto trading pairs, adding Orchid Protocol (OXT), DAI, Chainlink, and BAT–while skipping over mainstays like EOS and Ripple's XRP. As exchange co-founder Cameron Winklevoss alluded to in a Consensus: Distributed interview today, supporting new cryptocurrencies isn't the...
Both exchanges hold money transmitter licenses in multiple states; Gemini won a trust charter in 2015 from the New York State Department of Financial Services. Meanwhile, Coinbase has a BitLicense, a specialized license for crypto businesses, and is registered with the Financial Crimes Enforcement Network.
As well as an extensive vetting process, JPMorgan’s decision may have been influenced by increased interest in Bitcoin by mainstream investors and traders.
Trading volumes saw record highs in March and April, as people sought a safe haven from volatile traditional markets; investment platforms geared towards institutional investors, such as Grayscale, have been thriving, and more funds are turning to Bitcoin as a viable alternative, in the face of quantitive easing.
Even Wall Street legend Paul Tudor Jones has recently come out in favor of Bitcoin, contrasting its monetary policy with that of the Fed's. Beyond recommending it to other institutional traders, he also said that 1-2% of his assets are in Bitcoin.
Paul Tudor Jones makes compelling case for Bitcoin
Wall St. legend Paul Tudor Jones has made a compelling case for owning Bitcoin as a hedge against central bank money printing. “I am not a hard-money nor a crypto nut,” said the founder of hedge fund Tudor Investment Corp in his May communication to investors, published on Thursday. But, he added, “At the end of the day, the best profit-maximizing strategy is to own the fastest horse… If I am forced to forecast, my bet is it will be Bitcoin.” Jones, widely lauded as one of the greatest hedge fu...
In the past, JPMorgan chief executive Jamie Dimon has criticised Bitcoin. But, more recently, the bank has experimented with blockchain, and even its own digital currency, JPM Coin (for clients' digital payments.)
The bank approved the Coinbase and Gemini accounts in April, per the WSJ. Primarily, it will handle dollar-based transactions, and cash-management services for the exchanges.
No Bitcoin or crypto then—at least, not yet.
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