Bitcoin edges into bank lending as OCC sets guardrails

Confirmed vs claimed: Citi, JPMorgan Bitcoin-backed credit; access largely institutional

Michael Saylor has asserted that large U.S. banks are entering Bitcoin  BTC +0.00% -backed credit. As reported by BitcoinInsider, he names Citi, JPMorgan, and four peers as “issuing or preparing to issue” such credit.

Public confirmations remain narrower than the broad claims. As reported by CNBC in May 2025, JPMorgan said it would let clients buy Bitcoin and reflect holdings on statements while not providing custody, which differs from lending against Bitcoin.

Across the materials reviewed, detailed, retail-facing term sheets for Bitcoin-collateralized loans at Citi or JPMorgan are not presented. Coverage consistently frames any access as institutional or pilot-stage rather than mass-market.

Why it matters: OCC guidance, custody mechanics, and risk controls

Regulatory posture is central. As reported by Forbes, the Office of the Comptroller of the Currency has granted national trust bank charters to crypto-focused firms, aligning custody and related activities with federally supervised frameworks.

Accounting treatment also matters for feasibility. As reported by CNBC, the SEC’s 2025 revocation of Staff Accounting Bulletin No. 121 reduced an impediment to banks providing digital-asset custody at scale.

Balance-sheet treatment and capital are practical constraints. According to SuperEx News, banks generally do not hold Bitcoin directly on balance sheet, reflecting regulatory capital considerations and risk management norms.

Volatility remains the first-order risk to loan performance. As noted by BTCC, sharp price moves can quickly erode collateral value, elevating the chance of margin calls and forced liquidations in 50–70% LTV structures.

Viewed together, the policy shifts and custody options point to a careful, institutional-first rollout rather than universal availability. “A major milestone for institutional adoption,” said Paul Ugbede Godwin at Tekedia, characterizing the pace from 2024 to 2025.

At the time of this writing, Citigroup shares traded near $122.38, up about 5.7% intraday, based on data from Yahoo Scout. This market context does not imply any view on future performance.

How Bitcoin-collateral lending works and key risks

In a typical structure, a borrower pledges Bitcoin to a custodian under a control agreement. The bank then extends a credit line against that collateral, monitored continuously for valuation and eligibility.

When collateral value falls, the borrower may receive a margin call to post more Bitcoin or repay part of the loan. If the call is unmet, the collateral can be liquidated pursuant to pre-agreed terms.

Terms and risk: Bitcoin as collateral, loan-to-value (LTV), margin calls

Claimed bank terms vary, but reported figures have emerged. As reported by TradersUnion, commentary cites roughly $50 billion in new lines since September 2025, with 50–70% LTVs and 4–6% interest ranges.

Margining is calibrated to Bitcoin’s volatility and liquidity. Tighter LTVs lower default risk but reduce borrower capacity, while wider buffers can mitigate liquidation cascades during rapid price declines.

Custody models: bank balance sheet vs third-party implications

On-balance-sheet custody concentrates operational and capital demands within the bank. It may simplify control and liquidation but raises capital requirements and governance burdens.

Third-party custody can provide segregation, specialized security, and independent controls. However, it introduces counterparty, settlement, and legal risks that require robust agreements and ongoing oversight.