Michaela
Wall Street banks, such as JPMorgan and Bank of America, have reportedly started offering loans backed by Bitcoin (BTC) at 65-70% loan-to-value, marking a shift in how traditional finance treats crypto.
According to an X post by crypto analytics platform Aixbt, these major U.S. banks are increasingly profiting from Bitcoin-backed lending, where digital assets are used as collateral for loans. For example, a hypothetical scenario illustrates that a holder could post 10,000 BTC, borrow $600 million against it without triggering taxes, and use that capital to acquire more Bitcoin, repeating the cycle. Banks providing such loans can earn 2–4% annually on a large pool of BTC-backed credit, which could scale to tens of billions in total loan value.
“They need you to accumulate bitcoin to generate revenue. The leverage loop is their business model now,” Aixbt wrote.
As Bitcoin and other digital assets continue to gain mainstream acceptance, the rise of collateralized lending spotlights the evolving relationship between traditional financial institutions and the cryptocurrency market.
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These developments are not just a sign of growing confidence in digital assets but also reflect a broader trend of integrating crypto into established financial frameworks. Banks and institutional investors are increasingly designing products that blend conventional risk management with the unique characteristics of blockchain-based assets, offering clients innovative avenues to leverage their holdings without liquidation.
The expansion of BTC-backed loans may also influence market dynamics by creating new liquidity channels and encouraging longer-term holding strategies among investors. By providing structured credit opportunities, banks can help stabilize certain market segments, potentially reducing the pressure for sudden sell-offs during periods of volatility. At the same time, these products require careful consideration of interest rates, margin requirements, and the legal landscape, emphasizing the importance of clear regulatory guidance for both lenders and borrowers.
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For the broader crypto ecosystem, this trend signals a maturing market in which digital assets are increasingly treated as functional financial instruments rather than speculative curiosities. As institutions continue to explore ways to integrate cryptocurrency into lending, trading, and portfolio management, stakeholders at every level — retail investors, developers, and regulators — will need to navigate new opportunities and risks.
Ultimately, the emergence of crypto-backed lending by these Wall Street banks spotlights the ongoing transformation of global finance, blending innovation with conventional financial principles.
MICHAELA
Michaela is a news writer focused on cryptocurrency and blockchain topics. She prioritizes rigorous research and accuracy to uncover interesting angles and ensure engaging reporting. A lifelong book lover, she applies her passion for reading to deeply explore the constantly evolving crypto world.
