After JPMorgan Chase published a report warning financial companies they risk falling behind in digital finance, the bank is looking to issue debt linked to cryptocurrency-focused companies.
The debt instrument, called the J.P. Morgan Cryptocurrency Exposure Basket, is long on several companies with exposure to cryptoassets or associated with the industry. These include MicroStrategy, Square, Riot Blockchain, and chipmaker NVIDIA. In total, it has positions in 11 companies.
The prospectus, as CoinDesk reports, clarifies it does not directly invest in cryptocurrencies. The basket companies, it reads, “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.”
The filing further shows Wall Street players’ interest in the cryptocurrency space. The notes will pay out based on the basket companies’ performance, minus a 1.5% fee. They cost a minimum of $1,000 and have a maturation date set for May 2022.
As CryptoGlobe reported, last month Joyce Chang, Global Head of Research at J.P. Morgan, wrote in a note that in a “multi-asset portfolio, investors can likely add up to 1% of their allocation to cryptocurrencies in order to achieve any efficiency gain in the overall risk-adjusted returns of the portfolio.“
The largest bank in the U.S. has reportedly told some of its clients to consider Bitcoin as a portfolio diversifier, noting the cryptoasset could be beneficial if “sized correctly.” The suggestion came in an educational deck distributed to JPMorgan Private Bank clients, which must have a net worth of over $10 million.
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