Crypto exchanges brace for pressure as banks like JPMorgan enter spot trading

• The U.S. federal banking regulator has signaled a shift allowing banks to engage in crypto trading services, potentially reshaping competition in the trading sector.
• JPMorgan is exploring crypto trading services for institutional investors, following new guidance from the Office of the Comptroller of the Currency.
• The OCC's guidance allows banks to facilitate 'riskless principal' crypto transactions, enabling them to broker trades without holding inventory or taking market risk.

The U.S. federal banking watchdog signaled a regulatory shift that could fundamentally reshape competition in trading services across the United States.

That shift became apparent today, after Bloomberg reported that JPMorgan is exploring crypto trading services for institutional investors, marking one of the clearest indications yet that Wall Street banks are preparing to move beyond experimentation and into execution. CoinDesk contacted JPMorgan and they declined to comment on Bloomberg’s article.

The report follows a statement by a JPMorgan spokesperson, who previously told CoinDesk the bank was “digesting and assessing” recent guidance from the Office of the Comptroller of the Currency (OCC), confirming national banks can engage in crypto trading services.

The guidance, issued in an OCC Dec. 9 interpretive letter, confirmed that financial institutions may facilitate so-called “riskless principal” crypto-asset transactions, effectively allowing them to broker crypto trades without holding inventory or taking market risk.

The OCC statement suggests the regulator is intent on pulling crypto activity deeper into the regulated banking system, and on ensuring banks participate rather than sit on the sidelines, because, as experts say, if they do not move into crypto trading services now, others will.

“The market consequences will be significant,” said Burçak Ünsal, ÜNSAL Attorneys at Law managing partner. He said that “armed with regulatory legitimacy and the trust that accompanies it, banks are poised to absorb a meaningful portion of retail order flow."

"Stand-alone crypto exchanges that lack banking licenses will feel competitive pressure, particularly at the entry-level consumer segment," Ünsal added

Banks are already testing the water

Even before the OCC’s latest clarification, several large U.S. banks had begun laying groundwork for crypto execution and distribution, often quietly and through intermediaries.

JPMorgan Chase has developed blockchain-based settlement infrastructure via its Kynexis platform and JPM Coin, while also offering crypto-linked 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 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 crypto market makers and exchanges to provide execution, custody, or fiat rails, arrangements that could now expand into direct brokerage models under the OCC’s interpretation.

“This is a green light for banks to offer crypto brokering, but not a free pass to run full exchanges or offer every asset to every customer,” said Mati Greenspan, founder of Quantum Economics and former senior analyst at eToro. “Banks can now broker crypto trades, and that means a lot of everyday users will prefer to buy their bitcoin from their bank instead of, for example, Binance.”

A new competitive dynamic

Crypto sector lawyers and market participants broadly agree that the OCC’s framework is designed to let banks profit from crypto activity while minimizing exposure to volatility.

“Allowing regulated banks to facilitate crypto execution gives consumers more trust and removes friction that has slowed mainstream adoption,” said Ilies Larbi, founder of Ouinex Exchange. “But it also means banks could become dominant distribution channels for basic crypto exposure, putting pressure on retail-focused exchanges whose core revenue comes from spot trading and custody.”

Larbi noted that banks’ ability to perform “riskless principal” execution gives them a structural advantage. “They can earn fees and provide crypto exposure without holding inventory or taking market risk,” he said.

That dynamic puts pressure on U.S.-focused retail exchanges, such as Coinbase, Gemini, and Kraken, according to Keneabasi Umoren, a crypto market analyst and Web3 researcher.

“Wall Street can now legally rival crypto exchanges in the most profitable, low-risk part of the market,” Umoren 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.”

Kevin Lee, chief business officer at Gate, echoed that view, describing the OCC letter as “validation rather than disruption,” noting that “some volumes that would have gone to standalone platforms will migrate to bank channels over time.”

This would also help the traditional wealth management firms meet the demand of their clients for crypto-related financial services. “For mainstream retail and wealth-management clients, many customers will understandably prefer to transact inside their existing banking relationship,” Lee said.

The move follows a recent survey by Swiss software firm Avaloq found that the traditional wealth sector is under mounting pressure to deliver digital assets to wealthy clients.

In the UAE, for instance, 63% of ultra-rich investors have switched managers or are considering doing so, according to that survey.

Just don't call them exchanges

Still, many observers expect banks to move cautiously.

“Banks are likely to focus on a small basket of highly liquid assets, bitcoin, ether, and regulated stablecoins, rather than the full spectrum of tokens and products crypto-native exchanges support,” Gate's Lee said. “Rollouts will be conservative and incremental.”

While experts called the moment a turning point, they stressed that the competition is unlikely to be a zero-sum game. Many banks will still rely on crypto-native firms for liquidity, pricing, routing and infrastructure, creating opportunities for partnerships rather than outright displacement.

“Exchanges that are well-capitalized, compliant and global will adapt by powering the plumbing,” Lee said, “instead of only competing at the front end for every retail ticket.”

The OCC has not designated banks as crypto exchanges. But it has essentially declared them open for crypto brokerage business, and in a sector where regulatory credibility is scarce, that alone may prove transformative.

“Wall Street basically just got the green light to step onto the field,” Alex Mavashev, founder of ScalerX, said. “Banks can now sit in the middle of crypto trades with regulation and trust behind them. That’s a real threat to exchange margins.”

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