Market turmoil aside, Wall Street is rolling out Bitcoin (BTC) exposure to advisors through structured notes and ETF-backed loans.
At the same time, the bank is also facing the blow of debanking after Strike CEO Jack Mullers said his personal account with Chase had been closed. This contrast focuses on customer institutionalization and crypto-native principal risk management.
On the one hand, JPMorgan is moving its Bitcoin exposure into familiar wrappers such as structured notes tied to the performance of spot ETFs, forcing some clients to pledge Bitcoin ETF shares as collateral for their loans.
Meanwhile, Strike’s Jack Mallers says JPMorgan closed his personal account without explanation.
Together, they represent a split screen in the mainstreaming of cryptocurrencies: products for asset platforms, scrutiny for industry players.
The asymmetry is not subtle. JPMorgan has filed a leveraged structured note with the SEC that references BlackRock’s iShares Bitcoin Trust (IBIT) and says investors could earn 1.5x IBIT if held through 2028.
The $1,000 note includes an early call, and if IBIT trades above a preset level by December 2026, the bank will pay out at least $160 per note, a minimum return of 16% over roughly a year.
If this trigger is missed, the bond will advance to maturity, providing what JPM describes as “uncapped” upside as long as Bitcoin rises. The downside buffer ends abruptly, as most of the principal is wiped out after about a 40% decline from the initial IBIT level, and losses above that threshold follow the ETF’s decline.
This is not principal protected. This is classic structured product mathematics. The cushion is limited, there are leveraged gains, and there is a real possibility of large losses if Bitcoin sells through 2028.
The product is in the “SEC filing” stage, and distribution channels and sales volume estimates have not yet been made public. Structured notes of this design are typically sent to advised or authorized customers through broker-dealer and private bank channels rather than walk-in retail locations.
JPMorgan is testing a BTC-linked payoff within the same wrapper that wealthy clients already see for stocks and indexes, but availability and scale remain unclear.
Collateral play extends the playbook
By the end of the year, JPMorgan plans to let institutional clients use their Bitcoin and Ethereum holdings as collateral for loans and use third-party custodians to offer the program globally, according to a report from Bloomberg.
The move likely builds on an earlier step to accept ETFs linked to cryptocurrencies as loan collateral.
JPM already accepts ETFs linked to cryptocurrencies as collateral and is now moving towards accepting spot Bitcoin ETFs such as IBIT for secure funding.
In parallel, we are launching a program for institutional clients to directly borrow BTC and ETH positions held with external custodians.
The public report does not include the ETF’s full roster or haircut schedule. Still, the example cited is the mainstream Spot BTC ETF in the US, and the program is described as global and initially aimed at institutional and high-net-worth clients rather than the mass market.
Details of scale and distribution remain unclear. Available signals indicate that it is “built on a pilot of ETF-backed loans” with “select institutional and high-net-worth clients,” rather than being broadly available to all advisors on the platform.
ETF-backed lending will naturally sit in the private bank, wealth management, and trading client stack rather than basic branch banking.
The public report does not yet provide specific numbers regarding volume or explicit advisor channels.
Closures that break the pattern
“JPMorgan Chase kicked me out of the bank,” Jack Mallers wrote last month. His father has been a private client for more than 30 years.
Every time Mallaz asked why, staff told him, “We’re not allowed to tell you.” He posted an image of what he claimed was Chase’s letter. The letter cited “relevant activities” identified during routine monitoring, cited the Bank Secrecy Act, and said the bank was committed to “regulatory compliance and the safety and integrity of the financial system.”
The bank also warned that it may not be able to open new accounts for him in the future. Mallard’s personal banking business has moved to Strike.
JPMorgan has not provided a detailed explanation on the record about the specific trigger for closing Mallard’s account.
Spokespeople either declined to comment or generally emphasized that banks must comply with federal law, including the Bank Secrecy Act, when reviewing customer accounts, according to reports.
JPMorgan did not provide details of its rationale, citing its obligations under the Bank Secrecy Act.
The timing is perfect. On August 7th, President Donald Trump signed the Executive Order “Ensuring Fair Banking for All Americans,” which is aimed squarely at “abolishing politicized banking.”
Legal analysis describes it as directing regulators to identify and penalize banks that deny or terminate service to customers based on political, religious views, or industry affiliation.
In response to this order, the OCC issued guidance in September instructing large banks not to “debunk” customers on political or religious grounds and to limit unnecessary sharing of customer data in suspicious activity reports.
However, this guidance is about how banks weigh reputational risk against fair access. It does not relieve obligations under the Bank Secrecy Act to monitor accounts and report suspicious activity.
Compliance tracks run separately
On one track, a more friendly White House and Congress are trying to prevent banks from blocklisting entire categories such as cryptocurrencies on “reputation” grounds. On the other hand, there is nothing in the Executive Order or OCC Bulletin that rewrites BSA/AML law.
When JPMorgan invokes “related activities” discovered during BSA surveillance, the company relies on obligations that predate President Trump’s order and remain in full force and effect.
Regulators have called on banks to crack down on politically motivated account closures and remove “reputational risk” from their safety and soundness assessments. However, banks still file suspicious activity reports and manage money laundering risks.
This division shows how institutionalization proceeds on two fronts. The product team ties Bitcoin exposure into structures wealth advisors already understand, such as callable notes and loans backed by ETF shares.
Meanwhile, compliance teams continue to implement the same KYC and transaction monitoring playbooks as before the election.
The executive order changes the rhetoric, not the underlying BSA framework. Banks can no longer cite “cryptocurrency is too risky” as a blanket reason for terminating a relationship, but they retain full authority to close accounts if trading patterns fall foul of internal controls.
At issue is whether banks will treat principals in the crypto industry differently than their crypto-owning customers.
Wealth management customers who purchase IBIT through managed accounts have access to structured notes and secured financing.
A CEO who founded a Bitcoin payment company received a letter stating that it was “concerning activity” with no further explanation. The product is launched and the principal is reduced.
JPMorgan is testing whether it can service one without catering to the other, betting that Washington’s fair banking push won’t reverse the BSA-led shutdown and that customers will continue to buy exposure despite the bank distancing itself from industry executives.
Banks determine the line between acceptable and unacceptable participation in cryptocurrencies, and so far that line has been between holding assets and building infrastructure.
(Tag translation) Bitcoin
