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 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.