U.S. federal bank regulators have signaled a regulatory shift that could fundamentally reshape competition in trading services across the United States.
The shift became apparent today after Bloomberg reported that JPMorgan Chase & Co. is exploring cryptocurrency trading services for institutional investors, one of the clearest signs yet that the Wall Street bank is preparing to move beyond experimentation and into execution. CoinDesk reached out to JPMorgan, but they declined to comment on the Bloomberg article.
A JPMorgan spokesperson previously issued a statement saying that the bank is “digesting and evaluating” recent guidance from the Office of the Comptroller of the Currency (OCC) confirming that national banks can engage in cryptocurrency trading services.
The guidance, published in an OCC interpretive letter on Dec. 9, confirms that financial institutions can facilitate so-called “risk-free principal” crypto asset trading, effectively allowing them to broker crypto trades without holding inventory or taking on market risk.
The OCC’s announcement signals regulators’ interest in integrating cryptocurrency activity more deeply into the regulated banking system and ensuring that banks participate rather than stand aside because, as experts say, if they don’t enter cryptocurrency trading services now, someone else will.
“The market consequences will be significant,” said Burçak Ünsal, managing partner at ÜNSAL Attorneys at Law. “With regulatory legitimacy and the trust that comes with it, banks are poised to absorb a meaningful portion of retail order flow,” he said.
Ünsal added: “Independent cryptocurrency exchanges that lack banking licenses will feel competitive pressure, especially in the entry-level consumer space.”
Banks are already testing the waters
Even before the OCC’s latest clarification, several large U.S. banks had begun laying the groundwork for the execution and distribution of cryptocurrencies, often quietly through intermediaries.
JPMorgan has developed blockchain-based settlement infrastructure through its Kynexis platform and JPM Coin, while also providing cryptocurrency-related products to institutional clients. Goldman Sachs has relaunched its cryptocurrency trading arm, offering Bitcoin and Ethereum derivatives and structured products to hedge funds and asset managers. BNY Mellon has launched a digital asset custody service for select institutional clients, integrating cryptocurrencies into its existing custody and settlement stack.
Recently, banks, including Fidelity-affiliated entities and regional lenders, have partnered with cryptocurrency market makers and exchanges to offer arrangements such as execution, custodial or fiat tracks, which can now be extended to direct brokerage models, according to the OCC’s interpretation.
“This gives banks the green light to offer cryptocurrency brokerage, but not to run full-scale exchanges or give every customer a free pass on every asset,” said Mati Greenspan, founder of Quantum Economics and former senior analyst at eToro. “Banks can now broker cryptocurrency trades, which means many everyday users prefer to buy Bitcoin from banks instead of Binance.”
new competitive dynamics
Cryptocurrency industry lawyers and market participants generally agree that the OCC’s framework is designed to allow banks to profit from cryptocurrency activity while minimizing volatility risks.
“Allowing regulated banks to facilitate the execution of cryptocurrencies allows for more trust among consumers and removes the friction that has hindered mainstream adoption,” said Ilies Larbi, founder of Quinex Exchange. “But it also means banks could become the main distribution channel for underlying cryptocurrency exposure, putting pressure on retail-focused exchanges whose core revenue comes from spot trading and custody.”
Larbi noted that banks’ ability to execute “risk-free principal” gives them a structural advantage. “They can earn fees and provide exposure to cryptocurrencies without holding inventory or taking on market risk,” he said.
Cryptocurrency market analyst and Web3 researcher Keneabasi Umoren said this dynamic is putting pressure on U.S.-focused retail exchanges such as Coinbase, Gemini and Kraken.
“Wall Street can now legally compete with cryptocurrency exchanges in the most profitable and least risky parts of the market,” Umoulen said. “It won’t kill exchanges, but it will squeeze U.S. spot trading and custody revenue and push exchanges further into derivatives, DeFi and global markets.”
Gate chief commercial officer Kevin Lee agreed, describing the OCC’s letter as “validation rather than disruption,” noting that “over time, some of the volume that would otherwise go to independent platforms will migrate to banking channels.”
This will also help traditional wealth management firms meet customer demand for crypto-related financial services. “For mainstream retail and wealth management clients, it’s understandable that many clients prefer to transact within their existing banking relationships,” Lee said.
A recent survey by Swiss software company Avaloq found that the traditional wealth industry is facing increasing pressure to offer digital assets to wealthy clients.
In the UAE, for example, 63% of ultra-wealthy investors have changed managers or are considering doing so, according to the survey.
Just don’t call them swaps
Still, many observers expect banks to proceed with caution.
“Banks will likely focus on a small basket of highly liquid assets, Bitcoin, Ethereum and regulated stablecoins, rather than the full range of tokens and products supported by crypto-native exchanges,” said Gate’s Lee. “The rollout will be conservative and gradual.”
While experts call this moment a turning point, they stress that the competition is unlikely to be a zero-sum game. Many banks will still rely on crypto-native companies to provide liquidity, pricing, routing and infrastructure, creating opportunities for partnerships rather than outright replacements.
“Exchanges that are well capitalized, compliant and global will adapt by powering the pipeline,” Lee said, “rather than just competing on the front end for every retail ticket.”
The OCC has not yet designated the bank as a cryptocurrency exchange. But it has essentially announced that they are open to cryptocurrency brokerages, and that alone could prove transformative in an industry where regulatory credibility is scarce.
“Wall Street basically just got the green light to enter this space,” said Alex Mavashev, founder of ScalerX. “Banks can now participate in cryptocurrency trading with the backing of regulation and trust. This poses a real threat to exchange margins.”
