JP Morgan looks to introduce a crypto exposure basket product
JP Morgan filed paperwork with the US Securities and Exchange Commission for a crypto exposure basket yesterday
According to documents filed with the Securities and Exchange Commission (SEC) by the multinational investment bank, JP Morgan is preparing to launch a debt instrument involving crypto-related stocks. The basket product features a total of 11 unequally weighted reference stocks linked directly or indirectly to digital assets, as per the bank’s fact sheet.
Most of the stocks named in the basket are from big institutional investors of Bitcoin. These include MicroStrategy, which has the highest allocation, PayPal, Square, Intercontinental Exchange, CME Group, Silvergate Capital, and internet retailer Overstock. Tesla is a notable absentee in the basket despite recently pouring $1.5 billion into Bitcoin.
“The weights of the Reference Stocks were determined based in part on exposure to Bitcoin, correlation to Bitcoin and liquidity,” JP Morgan wrote.
The Wall Street investment bank will give investor clients an opportunity to get exposure to the turbulent digital assets market through the note. JP Morgan explicitly specified that the basket doesn’t offer investors direct exposure to digital assets and that the basket’s performance may not necessarily be consistent with the price of individual crypto assets.
“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.”
It is worth noting the filing for the basket product comes just one month after JP Morgan’s co-president and COO Daniel Pinto said the bank would get in on crypto as soon as client demand is satisfactory. The bank also previously issued its Private Bank clients a report expounding on Bitcoin as a portfolio diversifier if appropriately allocated. The move to introduce the product perhaps indicates a growing demand for crypto exposure among the Wall Street investor clients.
Specifics of the basket product are clearly outlined in the “Insight Notes Linked to the J.P. Morgan Basket of Companies with Exposure to Cryptocurrency.” Other companies that are featured in the basket are GPU designer NVIDIA, Riot Blockchain (each accounting for 15% of the basket), and semiconductor manufacturing company AMD,
The basket has the pricing and original issue dates of 26 March and 31 March, respectively. The document also revealed the observation date of 2 May next year, followed by a maturation date three days later. Investors can inject a minimum of $1,000 into the basket product.
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Sam Grant, @KhareemSudlow