Banks and Digital Assets: From Opposition to Cautious Participation

The evolution of major banks’ relationship with crypto and digital assets is one of the more striking institutional transformations of the past decade. In 2017, JPMorgan’s Jamie Dimon called Bitcoin a “fraud,” threatened to fire JPMorgan employees caught trading it, and positioned himself as the voice of financial establishment skepticism about crypto excess. By 2020, JPMorgan had launched JPM Coin. By 2024, the bank’s Onyx blockchain division was processing billions in institutional transactions, it had a tokenized collateral network used by major asset managers, and it was actively lobbying for the regulatory frameworks that would legitimise and expand its digital asset business.

This arc — from dismissal to opposition to cautious experimentation to active strategic investment to regulatory lobbying for favourable treatment — reflects a rational institutional response to a technological and competitive environment that forced adaptation. Understanding how major banks have engaged with crypto and digital asset regulation is essential for understanding who is shaping the rules and what interests those rules serve.

JPMorgan: The Most Complete Transformation

JPMorgan’s evolution is the most thoroughly documented because Dimon’s public skepticism made the initial opposition so visible. The 2017 “Bitcoin is a fraud” statement was not a casual comment — it was a considered position from the CEO of the world’s most powerful investment bank, reflecting the bank’s assessment that Bitcoin’s lack of intrinsic value, its absence of regulatory backing, and its association with illicit finance made it unsuitable for institutional engagement.

What changed was not Dimon’s view of Bitcoin as a speculative asset — he has maintained skepticism about Bitcoin’s intrinsic value throughout. What changed was JPMorgan’s assessment of blockchain as infrastructure and tokenization as a business opportunity.

JPM Coin, launched in 2020, was the first major bank-issued digital currency for institutional clients. It operated on a permissioned blockchain — not a public blockchain like Ethereum — and was designed specifically for institutional payment flows between JPMorgan clients. The coin was not a public cryptocurrency; it was a tokenized claim on JPMorgan’s balance sheet that could be transferred on blockchain infrastructure with faster settlement than traditional correspondent banking.

The Onyx division, which houses JPMorgan’s blockchain activities, expanded significantly from 2020 onward. The Tokenized Collateral Network — which allows institutional clients to pledge and transfer collateral as tokenized assets on blockchain infrastructure — became one of the most consequential institutional blockchain deployments in the financial industry. BlackRock used the network to tokenize money market fund shares as collateral in 2023, a transaction that demonstrated the practical utility of tokenized real-world assets at institutional scale.

JPMorgan has also participated extensively in central bank digital currency pilot programmes globally, including the Monetary Authority of Singapore’s Project Guardian (institutional DeFi with tokenized bonds and deposits) and multiple BIS Innovation Hub projects. This participation gives the bank insight into how CBDCs will be designed and how they will interact with commercial bank digital assets — insight that shapes the bank’s regulatory lobbying positions.

Goldman Sachs: The Digital Asset Platform

Goldman Sachs developed its digital asset capabilities somewhat more quietly than JPMorgan but with comparable strategic commitment. The bank’s Digital Asset division — which encompasses blockchain infrastructure for bond issuance, repo transactions, and custody — has issued multiple tokenized bonds on blockchain platforms, including a tokenized green bond for the European Investment Bank.

Goldman’s Marcus consumer bank product line included digital finance features, and the bank has built crypto custody capabilities for institutional clients. Its trading desk has been involved in crypto derivatives and structured products, and it was among the first major banks to offer Bitcoin futures to institutional clients following CFTC authorisation.

The bank’s lobbying on digital asset regulation has focused primarily on the institutional investment dimensions: the treatment of crypto assets on institutional balance sheets, the securities law status of tokenized bonds and funds, and the custody regulations that determine whether banks can hold crypto for institutional clients. Goldman’s most significant regulatory engagement was the campaign against SAB 121 — the SEC accounting guidance that required banks to record crypto custody assets as balance sheet liabilities.

SAB 121’s practical effect was to impose significant capital costs on bank crypto custody, making it economically unviable for banks to compete with non-bank custodians like Coinbase Custody and BitGo. Goldman and other major banks lobbied extensively against this guidance — a rare instance of bank and crypto-native industry interests aligning perfectly against a single regulatory provision. Congress passed a resolution disapproving SAB 121, which was initially vetoed but subsequently revised by the new administration.

BlackRock: BUIDL and the ETF Campaign

BlackRock’s engagement with crypto and tokenized assets represents something qualitatively different from JPMorgan’s and Goldman’s: it is the world’s largest asset manager, managing over $10 trillion in assets, bringing that scale and institutional credibility to both tokenized fund products and crypto investment vehicles.

The BUIDL fund — BlackRock USD Institutional Digital Liquidity Fund — launched in March 2024 on the Ethereum blockchain, tokenizing shares in a money market fund that holds cash and US Treasury bills. The fund allows institutional investors to hold tokenized money market fund shares on blockchain infrastructure, enabling faster settlement and potential use as on-chain collateral. Its rapid growth to over $500M in assets demonstrated institutional appetite for tokenized money market instruments.

BlackRock’s lobbying for a Bitcoin spot ETF — which it pursued through multiple SEC filings, litigation support, and extensive engagement with SEC staff — was the most visible crypto-related regulatory campaign by a major traditional asset manager. The eventual approval of spot Bitcoin ETFs in January 2024 produced immediate massive institutional inflows, with BlackRock’s iShares Bitcoin Trust becoming one of the fastest-growing ETFs in history. The regulatory outcome BlackRock lobbied for was worth billions in management fees.

Citi Token Services and the Broader Pattern

Citigroup’s Citi Token Services represents another major bank’s systematic engagement with tokenized assets. Citi Token Services enables 24/7 cross-border payments, trade finance, and collateral management using tokenized deposits — effectively a bank-issued stablecoin for institutional clients operating on Citi’s own blockchain infrastructure.

The pattern across JPMorgan, Goldman, BlackRock, Citigroup, and other major institutions is consistent: each has built significant blockchain and tokenized asset capabilities, each is operating products in production rather than merely in pilot mode, and each is now lobbying for regulatory frameworks that legitimate their digital asset businesses while creating barriers for crypto-native competitors.

The Lobbying Strategy: Participate and Advantage

The banks’ current lobbying strategy is not primarily defensive — it is offensive. Having built digital asset capabilities, the major banks are now using their regulatory access and political relationships to shape the frameworks that govern those capabilities in their favour.

The most important dimension of this strategy is the push for frameworks that require digital asset activities to be conducted through licensed, supervised institutions — banks and bank subsidiaries. Stablecoin issuance through bank charters, crypto custody through bank-regulated custodians, tokenized securities through registered broker-dealers: each of these requirements channels digital asset business toward institutions that already have the required licences, and away from crypto-native firms that would need to acquire them.

The banks’ lobbying advantage in this campaign is the same advantage they always bring to Washington: long relationships with congressional finance committees and banking regulators, credibility as systemically important institutions whose concerns regulators take seriously, and the implicit argument that banking regulation exists for good reasons and that digital asset regulation should reflect those lessons.

The result — if the banking industry’s lobbying succeeds — is a digital asset regulatory framework that looks substantially like banking regulation, implemented by banks and bank-supervised entities, with crypto-native firms either excluded or forced to acquire bank-like charters that impose costs and constraints that fundamentally change their business models. Whether this outcome serves the public interest or primarily serves the interests of incumbent financial institutions is the central political economy question of the current regulatory moment.