JPMorgan Provides Banking Services to Crypto Exchanges Coinbase and Gemini

JPMorgan Chase, the United States’ largest bank, has reportedly taken on U.S. cryptocurrency exchanges Coinbase and Gemini as customers.

A report from the Wall Street Journal on May 12 cited unnamed sources apparently familiar with the matter, who highlighted that the move is the first time the banking giant has served clients from the crypto industry.

Both exchange accounts were reportedly accepted in April, with transactions now starting to be processed, sources told the WSJ.

JPMorgan Chase is not processing Bitcoin (BTC) or other cryptocurrency transactions on behalf of the exchanges but is providing cash-management services and handling dollar transactions for their U.S.-based clients. The bank will reportedly process all wire transfers and dollar deposits and withdrawals via the Automated Clearing House network.

Coinbase and Gemini are notably regulated

The sources have claimed that both exchanges were asked to undergo a rigorous vetting process, pointing to major banks’ long-standing reluctance to forge relationships with crypto-related businesses. 

Coinbase and Gemini have both established themselves as thoroughly-regulated entities; the latter, owned by the Winklevoss twins, has previously drawn criticisms from diehard libertarian cryptocurrency advocates for its controversial 2019 “crypto needs rules” ad campaign.

This April, Gemini obtained a new security qualification, a Service Organization Control (SOC) 1 Type 1 certification, after passing a review by Big Four accounting firm Deloitte.

Coinbase Custody had, for its part, previously sealed both an SOC 1 Type 2 and a SOC 2 Type 2 evaluation by major accounting firm Grant Thornton.

Coinbase is registered as a money services business with the Financial Crimes Enforcement Network and Gemini obtained a trust charter from New York’s Department of Financial Services back in 2015. 

Both exchanges have also satisfied the requirements to operate under NYDFS’ exacting BitLicense framework and are licensed money transmitters in multiple states.

JPMorgan’s Jamie Dimon has been a vocal Bitcoin critic

For those who have followed JPMorgan chairman and CEO Jamie Dimon’s stance toward the crypto space in recent years, news of the bank’s pathbreaking support for both exchanges may be somewhat surprising.

Among his spicier statements, Dimon has said that Bitcoin is “worse than tulip bulbs,” predicting that speculation on the coin “won’t end well.” 

The bank has been positive about blockchain’s potential, however, and announced plans to issue its own settlement-focused digital currency, JPM Coin, in mid-February 2019.

Recently, the bank has reportedly been considering a merger of its in-house blockchain unit Quorum — which underlies its Interbank Information Network —  with the well-known Ethereum-focused firm ConsenSys.