Just weeks after JPMorgan Chase published a report warning that traditional financial companies are at risk of falling behind in digital finance, the largest U.S. bank is looking to issue debt linked to cryptocurrency-focused companies.
J.P. Morgan Cryptocurrency Exposure Basket, the incoming debt instrument, is long on MicroStrategy (20%) Square (18%), Riot Blockchain (15%) and chipmaker NVIDIA (15%) with positions in 11 companies total. It does not invest directly in cryptos, according to the prospectus.
The basket companies "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," JPMorgan said in the prospectus.
The filing reveals yet another way Wall Street players are looking to give their clients access to the upside of a booming crypto market, which CoinGecko now estimates at $1.7 trillion.
The prospectus documents state the notes will pay out based on the basket companies’ performance less a 1.5% deduction – essentially the fee. They cost a minimum of $1,000 minimum and have a maturation date of May 2022.
A search of JPMorgan’s history of regulatory filings indicates the mega-bank has never before issued notes related to the performance of crypto companies. Representatives for the bank did not immediately respond to CoinDesk queries.
Read more about
The leader in news and information on cryptocurrency, digital assets and the future of money, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups. As part of their compensation, certain CoinDesk employees, including editorial employees, may receive exposure to DCG equity in the form of stock appreciation rights, which vest over a multi-year period. CoinDesk journalists are not allowed to purchase stock outright in DCG.