JPMorgan Chase (JPM) – Get Report will offer an actively managed bitcoin fund to its clients later this year, CoinDesk reported Monday, a move that would signal a significant change in focus for a bank whose CEO called bitcoin a ‘dangerous fraud; less than four years ago.
CoinDesk said the fund will be offered to clients in JPMorgan’s private wealth division, and follows a move earlier this year by Wall Street rival Morgan Stanley MS, which launched access to bitcoin funds for its own private clients from Galaxy Digital, FS Investments and NYDIG.
JPMorgan shares were marked 0.5% higher in pre-market trading Monday to indicate an opening bell price of $150.95 each.
Bitcoin prices have surged more than 84% so far this year, and reached an all-time high of just under $65,000 on April 14, pulling the value of it, and other digital currencies such as Ethereum, Tether and Dogecoin, past $2 trillion.
The Grayscale Bitcoin Trust (GBTC) – Get Report, the cryptocurrency’s biggest trust provider and a benchmark for tracking institutional investor activity, is up 195% over the past six months and has a market value of more than $455 billion.
Bitcoin’s mainstream adoption has also paralleled its extraordinary price increase, with PayPal unveiling plans last month that will allow its customers the ability to buy goods and services with cryptocurrencies at more than 29 million merchants around the world in what may be the biggest single effort to normalize digital purchases.
Bitcoin’s use in goods and services transactions remains remarkably small, however, with a 2018 study suggesting monthly volumes of less than $60 million.
The heavy environmental cost of bitcoin’s complicated settlement procedure is also a factor in its slow transaction processing speed, a recent study from Bank of America noted, with just 14,000 transactions per hour. Visa (V) – Get Report, by contrast, processes more than 236 million each hour.
Still, with companies such as Tesla (TSLA) – Get Report, Square (SQ) – Get Report and Twitter (TWTR) – Get Report adding to their bitcoin investments and retail investors pouring into to the cryptocurrency world at a record pace, JPMorgan’s decision to facilitate its client’s interests does make commercial sense.
For JPMorgan CEO Jamie Dimon, who said last November that bitcoin is “just not my cup of tea” , it’s also the logical extension of the bank’s move into digital currencies in 2019, when it introduced a stablecoin used to facilitate debt transactions and treasury services.