JPMorgan Bank acquires Coinbase and Gemini as the first crypto client

Its CEO once called bitcoin a fraud, but now the US banking giant JPMorgan Chase has acquired the first crypto-exchanges among its customers.

Accounts to JPMorgan already in use for Coinbase and Gemini

Sources reported Tuesday May 12 to the Wall Street Journal (WSJ) that the bank has welcomed two popular regulated exchanges: Coinbase and Gemini, the latter founded by Tyler and Cameron Winklevoss.

The fact that both exchanges are regulated in the United States was apparently a decisive factor in the approvals, which still required a long period of verification, the WSJ said.

The accounts for the two cryptography companies were approved last month, according to sources, and are now in use. JPMorgan's decision is notable in a nation where banking services for all cryptocurrency companies are difficult to find, since they are considered high-risk activities by the banking sector.

Until now, exchanges and other companies that work with digital assets have been served by some crypto-friendly banking institutions such as Silvergate.

Will other institutions follow JPMorgan's example?

However, Gemini and Coinbase are not the first crypto-clients for JPMorgan. TokenSoft, a regulated transfer agent and software provider for security token services, has had an account with the bank since 2017, said CEO Mason Borda on Twitter.

With cryptocurrency companies now accepted by a large bank, other institutions may be following suit. The traditional financial sector is becoming more open to financial technology as it demonstrates a worthy investment at a time when the markets' favorite assets are in trouble.

Bitcoin has risen 20% this year, while the S&P 500 stock index has dropped 9.3% and oil has dropped 66%. Gold, the most traditional safe haven, grew 11.5% during a time when markets were overwhelmed by the effects of the coronavirus pandemic.

Last week, hedge fund pioneer Paul Tudor Jones II revealed that his Tudor BVI Global Fund is now authorized to invest in bitcoin futures. Jones also told CNBC shortly thereafter that he holds 1% -2% of his bitcoin assets.

He did not say whether he invested in real bitcoin or bitcoin futures. WSJ sources said JPMorgan is now providing US users of Coinbase and Gemini with deposits and withdrawals via bank transfer and automated Clearing House (ACH) transactions.

It is also helping exchanges with liquidity management services, they added. JPMorgan also created its own blockchain settlement service with its own dollar-backed token called JPM Coin.