Why U.S. Banks Are Now Embracing Bitcoin-Backed Lending

In a striking reversal of fortune, several of America’s largest banks have moved from crypto skepticism to active participation — now offering loans backed by Bitcoin (BTC). According to a recent report by PwC and Kaiko Research, since September 2025 U.S. banks have issued around $50 billion in new credit lines, and now account for 40% of the $150 billion annual crypto-lending market. (Traders Union)

At the center of this transformation is a shift in the regulatory and financial landscape. Changes tied to Basel III now classifies Bitcoin as a “Tier-1 asset,” easing previous capital and regulatory constraints. Combined with rising demand for crypto-collateralized credit, this has opened the door for banks to finally step into the lending arena. (Traders Union)

Behind the Shift: From Skepticism to Adoption

For decades, major banks largely avoided cryptocurrency — citing volatility, regulatory uncertainty, and reputational risk. But in recent months, six major institutions — JPMorgan, Citibank, Wells Fargo, BNY Mellon, Charles Schwab, and Bank of America — have launched BTC-backed lending programs. (Traders Union)

Remarkably, this transformation from zero crypto involvement in late 2024 to active participation by late 2025 happened in just 12 months — far sooner than many analysts expected. (Traders Union)

According to industry veteran Michael Saylor, these new loans offer loan-to-value (LTV) ratios between 50–70%, with interest rates of 4–6% — making them an increasingly attractive option for borrowers who hold Bitcoin. (Traders Union)

What This Means for Crypto and Traditional Finance

— Mainstreaming Crypto Use in Finance

With major banks underwriting BTC-backed loans, Bitcoin is steadily shedding its fringe status and becoming integrated into mainstream finance. This isn’t just about storing or trading crypto — it’s about using crypto assets as collateral to unlock credit, much like traditional mortgages or margin loans.

— A New Wave of Institutional Access

Banks are uniquely positioned to offer regulated, secure, and scalable crypto lending — potentially unlocking a wave of new demand from investors, asset managers, and institutions who were previously shut out due to regulatory or operational barriers.

— A Structural Shift Accelerated by Regulation

The regulatory changes under Basel III, plus growing regulatory clarity from federal authorities, appear to be key enablers of this shift. As more banks adopt Bitcoin-backed lending and services, the lines between traditional finance (TradFi) and crypto finance (CryptoFi) continue to blur.

What to Watch Next

• More banks joining the trend. If six major banks have already onboarded, it’s likely more regional and international banks will follow.

• New crypto-enabled financial products. Expect not just loans, but also BTC-backed mortgages, wealth-management products, and perhaps tokenized collateral in more complex financial instruments.

• Potential risks and volatility. While BTC-backed loans offer new opportunities, Bitcoin remains volatile. Borrowers using Bitcoin as collateral — and banks underwriting such loans — must be prepared for swings in price.

• Regulatory and compliance evolution. As more banks enter crypto lending, regulators will likely adapt — which could bring both clearer guardrails and new compliance burdens.

Final Thoughts

The rapid shift from skepticism to full-blown participation by major U.S. banks marks a potential turning point for Bitcoin and the broader crypto economy. What was once the domain of niche exchanges and crypto-native firms is now being adopted by some of the most established names in global finance.

For anyone watching the space — whether as an investor, developer, or observer — this development signals that crypto may finally be crossing from speculative fringe into foundational financial infrastructure.

(Disclaimer: This post is for informational purposes only. It does not constitute financial advice.)

• Traders Union