JPMorgan has plans to launch a new product that will give investors exposure to cryptocurrencies. A filing with the SEC shows that the bank will create a “basket of companies with exposure to cryptocurrency.”
This product is designed to provide investors with exposure to the highly volatile asset class indirectly. It will do so through companies that either hold BTC as part of their corporate treasury strategy, or whose revenue is tied to the crypto industry in some way.
The largest portion of the basket will be allocated to data analytics firm MicroStrategy at 20%. The firm has over 90,000 Bitcoin on its balance sheet worth nearly $5 billion. Following them is Jack Dorsey’s crypto company Square, which will have 18% allocated.
Riot Blockchain, Paypal, and NVIDIA Holdings will all have a 15% exposure as well. Additionally the likes of CME Group, Overstock.com, Silvergate Capital and others are involved in the basket.
JPMorgan will create debt products linked to the performance of the crypto basket. This will give investors indirect exposure to the cryptocurrency market. The company’s filing stressed however, “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.”
JPMorgan also classified the Reference Stock weight based, in part, on the exposure it has to Bitcoin. Further factors include overall liquidity and correlation to Bitcoin as a whole.
The bank explained that payouts for this new product will be determined by the performance of this basket of companies. The minimum investment has been set at $1,000, and the maturation date has been specified at May of 2022.
JPMorgan’s “Crypto Basket” Being Launched Due To Increased Demand
This new product is being launched in response to the increased demand for indirect exposure to cryptocurrencies. But it is also an indicator of where innovation lies in the tech world.
By getting involved with crypto these major brands help themselves by boosting company revenues and treasury reserve balance sheets. It also brings these companies extra attention.
Perhaps most importantly, JPMorgan responding to demand for these types of products provides legitimacy to Bitcoin and the crypto industry as a whole.