The U.S. federal banking watchdog has signaled a regulatory change that could fundamentally reshape competition in the U.S. business services industry.
This shift became evident today after Bloomberg reported that JPMorgan was exploring cryptocurrency trading services for institutional investors, in one of the clearest indications yet that Wall Street banks are preparing to move beyond experimentation and into execution. CoinDesk contacted JPMorgan and declined to comment on the Bloomberg article.
The report follows a statement from a JPMorgan spokesperson, who previously told CoinDesk that the bank was “digesting and evaluating” recent guidance from the Office of the Comptroller of the Currency (OCC), confirming that domestic banks can engage in crypto trading services.
The guidance, issued in a Dec. 9 OCC interpretative letter, confirmed that financial institutions can facilitate so-called “risk-free” crypto-asset transactions, allowing them to transact cryptocurrency transactions without holding inventory or taking on market risk.
The OCC statement suggests that the regulator intends to deepen crypto activity in the regulated banking system and ensure that banks participate rather than stay on the sidelines, because, as experts say, if they don’t jump into crypto trading services now, others will.
“The consequences on the market will be significant,” said Burçak Ünsal, managing partner of ÜNSAL Attorneys at Law. He said that “with regulatory legitimacy and the confidence that comes with it, banks are poised to absorb a significant portion of retail order flow.”
“Standalone crypto exchanges lacking banking licenses will face competitive pressure, especially in the entry-level consumer segment,” Ünsal added.
Banks are already testing the waters
Even before the OCC’s latest clarification, several major U.S. banks had begun laying the groundwork for the execution and distribution of cryptocurrencies, often quietly and through intermediaries.
JPMorgan Chase has developed blockchain-based settlement infrastructure through its Kynexis platform and JPM Coin, while also offering crypto-related products to institutional clients. Goldman Sachs has restarted its crypto trading desk, offering Bitcoin and Ether derivatives, as well as structured products to hedge funds and asset managers. BNY Mellon has launched digital asset custody services for select institutional clients, integrating crypto into its existing custody and settlement stack.
More recently, banks, including Fidelity-affiliated entities and regional lenders, have partnered with market makers and crypto exchanges to provide execution, custody, or fiat rails, arrangements that could now extend to direct brokerage models under the OCC’s interpretation.
“It’s a green light for banks to offer cryptocurrency brokerage, but not a free pass to run full trades or offer full assets to every customer,” said Mati Greenspan, founder of Quantum Economics and former senior analyst at eToro. “Banks can now broker crypto transactions, which means many everyday users will prefer to buy their bitcoin from their bank rather than, say, Binance.”
A new competitive dynamic
Crypto industry lawyers and market participants largely agree that the OCC framework is designed to allow banks to profit from crypto activity while minimizing exposure to volatility.
“Allowing regulated banks to facilitate the execution of cryptocurrencies gives more consumer confidence and removes frictions that have slowed mainstream adoption,” said Ilies Larbi, founder of Ouinex Exchange. “But it also means that banks could become dominant distribution channels for core crypto exposure, putting pressure on retail-focused exchanges whose main revenues come from spot trading and custody.”
Larbi emphasized that banks’ ability to execute “risk-free principal” gives them a structural advantage. “They can earn fees and provide exposure to crypto without holding stocks or taking market risk,” he said.
This dynamic is putting pressure on U.S.-focused retail exchanges such as Coinbase, Gemini and Kraken, according to crypto market analyst and Web3 researcher Keneabasi Umoren.
“Wall Street can now legally compete with crypto exchanges in the most profitable, low-risk part of the market,” Umoren said. “It won’t kill exchanges, but it will reduce US revenue from spot trading and custody and push exchanges further into derivatives, DeFi and global markets.”
Kevin Lee, Gate’s chief commercial officer, echoed this view, describing the OCC letter as “validation rather than disruption,” noting that “some volumes that would have been directed to standalone platforms will migrate to banking channels over time.”
It would also help traditional wealth management firms meet their clients’ demand for crypto-related financial services. “For traditional retail and wealth management clients, many clients will naturally prefer to transact within their existing banking relationship,” Lee said.
The move follows a recent survey by Swiss software company Avaloq, which found that the traditional wealth sector is under increasing pressure to provide digital assets to wealthy clients.
In the United Arab Emirates, for example, according to this survey, 63% of ultra-rich investors have changed managers or are considering doing so.
Don’t call them exchanges
However, many observers expect banks to act cautiously.
“Banks are likely to focus on a small basket of highly liquid assets, Bitcoin, Ether and regulated stablecoins, rather than the full range of tokens and products supported by crypto-native exchanges,” Gate’s Lee said. “Deployments will be conservative and progressive. »
Although experts are calling this a turning point, they stress that competition is unlikely to be a zero-sum game. Many banks will continue to rely on crypto-native companies for liquidity, pricing, routing and infrastructure, creating opportunities for partnership rather than outright displacement.
“Well-capitalized, compliant, global exchanges will adapt by powering the plumbing,” Lee said, “instead of only competing at the beginning for each retail ticket.”
The OCC has not designated banks as crypto exchanges. But he essentially declared them open to crypto brokerage business, and in an industry where regulatory credibility is rare, that alone could prove transformative.
“Wall Street just got the green light to enter the field,” said Alex Mavashev, founder of ScalerX. “Banks can now sit in the middle of crypto transactions with regulation and trust behind them. This is a real threat to FX margins.”
