JP Morgan Launching Crypto Investment Product Tracking Public Company Stocks With Bitcoin Exposure – Finance Bitcoin News
JP Morgan Launching Crypto Investment Product Tracking Public Company Stocks With Bitcoin Exposure
JP Morgan is launching a structured investment product based on the performance of its “Cryptocurrency Exposure Basket,” which tracks stocks of publicly traded companies with exposure to cryptocurrencies. The weight of each stock is “determined based in part on exposure to bitcoin, correlation to bitcoin and liquidity,” according to the company’s filing with the U.S. Securities and Exchange Commission (SEC).
JP Morgan to Begin Providing Clients With Bitcoin Exposure
In a Tuesday filing with the SEC, JPMorgan Chase revealed a structured investment product that enables its clients to gain exposure to cryptocurrencies.
“The notes are unsecured and unsubordinated obligations of JPMorgan Chase Financial Company LLC,” the company explained. The payment on which is “fully and unconditionally guaranteed by JPMorgan Chase & Co.”
JPMorgan elaborated:
The notes are designed for investors who seek exposure to the performance of the J.P. Morgan Cryptocurrency Exposure Basket (Mar 2021) of 11 unequally weighted reference stocks, which we refer to as the basket, as reduced by the basket deduction of 1.50%.
The investment bank added: “Notwithstanding the name of the basket, the notes do not provide direct exposure to cryptocurrencies and the performance of the basket may not be correlated with the price of any particular cryptocurrency, such as bitcoin.”
The reference stocks represent the common stocks of “11 U.S.-listed companies that operate businesses that we believe to be, directly or indirectly, related to cryptocurrencies or other digital assets, including as a result of bitcoin holdings, cryptocurrency technology products, cryptocurrency mining products, digital payments or bitcoin trading,” JP Morgan detailed.
They include Microstrategy’s Class A common stock, Square’s Class A common stock, Riot Blockchain’s common stock, Nvidia’s common stock, Paypal Holdings’ common stock, and Advanced Micro Devices’ common stock.
The minimum denomination for the new investment product is $1,000. The notes are expected to price on or about March 31 and are expected to settle on or about April 6.
“The weights of the reference stocks were determined based in part on exposure to bitcoin, correlation to bitcoin and liquidity,” JPMorgan further clarified. “The basket may be subject to extreme price volatility and rapid and substantial decreases in price over the term of the notes.”
The investment bank has come a long way since its CEO Jamie Dimon called bitcoin a fraud back in September 2017. The firm recently came up with three key benefits for investing in BTC after its analysts predicted that the price of the cryptocurrency could reach $146,000 as its competition with gold heats up. The firm then recommended that investors could put 1% of their portfolios in cryptocurrency.
What do you think about JP Morgan launching a crypto product? Let us know in the comments section below.
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JPMorgan’s Latest Crypto Play: Bitcoin Exposure With Less Volatility
JPMorgan plans to issue a structured investment product featuring indirect exposure to cryptocurrency markets.
The investment bank plans to offer the so-called structured note to its clients at the end of March, according to regulatory filings it has lodged with the Securities and Exchange Commission and reporting from The Block.
Here’s how that works: JPMorgan will issue a structured debt product that maintains stock holdings in companies that in turn have their own exposure to Bitcoin and perhaps other cryptocurrencies. Retail and institutional investors would then have the opportunity to buy into the debt issuance with a minimum investment of $1,000.
JPMorgan would not have direct exposure to crypto under that arrangement. The idea is to offer investors exposure to booming crypto markets with less volatility than holding digital assets directly.
The structured product would comprise a basket of 11 stocks of U.S. listed companies with business related to cryptocurrencies.
The basket of stocks includes business intelligence firm MicroStrategy, which has over 90,000 Bitcoin in its corporate treasury; payments firm Square which holds about Bitcoin on its balance sheet and derives most of its revenue from Bitcoin trading; and graphics-card maker Nvidia, whose products are used to mine Ethereum and other cryptocurrencies.
The largest components of the basket are MicroStrategy, with a weighting of 20%; then Square at 18%; and Nvidia and Riot Blockchain with 15% each, accordingly.
The note will be priced on March 31 and will have a final value on May 2. This means the value of the basket must have risen between those dates in order for a holder of the note to profit. The note also carries a 1.5% deduction, which is taken before any returns are distributed to holders.
The bank has previously issued similarly designed notes with exposure to 5G, coronavirus recovery and renewable energy.
The new JPMorgan product demonstrates Wall Street’s growing responsiveness to customer demand for cryptocurrency exposure. New exchange-traded funds for Bitcoin have seen surging volumes, while funds capturing the activity in the decentralized finance space have also boomed.
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