11 Mar 2021 Jane Whitmoore
JPMorgan To Offer Аccess To Cryptocurrencies Via A Bitcoin Exposure Basket
The largest U.S. bank to date – JPMorgan, is about to become a gateway for their clients into the crypto world with the introduction of their Bitcoin Exposure Basket. A total of 11 unequally weighted stocks would be added to the basket. JPMorgan would initiate a structured note offering, the value of which will depend on the performance of the stocks, tied to Bitcoin and other crypto assets.
The basket contains Class A common stocks of MicroStrategy (20%), Square (18%), and the common stocks of Riot Blockchain (15%) and NVIDIA Corporation (15%). Combined, the four companies’ stock would make 68% of the total basket weight. According to bitcointreasuries.com, the total amount the first three companies hold in Bitcoin equals $5.6 billion.
Despite that the U.S. Securities and Exchange Commission (SEC) has to give the “thumbs up” to a U.S.-based crypto ETF, JPMorgan’s notes come close to being such. JPMorgan has set a minimum of $1,000 entry fee per note, as well as a basket deduction fee of 1.5%.
The new product of the bank is targeted at investors, who don’t want to gain direct exposure to Bitcoin, and prefer taking a risk-averse approach to the recent crypto surge. MicroStrategy and Square became notoriously bullish about Bitcoin in the past. PayPal also joined the crypto game by offering Bitcoin exposure to their 300 million users.
However, the move by JPMorgan faced some criticism, mainly in the face of Jeff Dorman, CIO of crypto investment company Arca. Dorman called the Bitcoin Exposure Basket a “garbage” portfolio. Furthermore, Dorman emphasized the fact that cryptos are not directly related to the core businesses of the companies and their profitability. AMD, for example, has little to no iteration with cryptos, apart from their chips being used for blockchain operations and crypto mining.
Meanwhile, Jack Tatar, managing partner at Doyle Capital Management, noted that JPMorgan’s basket could be a “gateway drug for investing into crypto” due to the fact that many financial advisors and institutional investors are not eligible to perform direct investments in Bitcoin.
“What really needs to happen is that the SEC needs to provide some guidelines, and financial companies need to step up and recognize that they are denying the best performing asset of the decade, bitcoin, to their investors,” Tatar stated.Cryptocurrency SEC Crypto Market crypto cryptocurrencies bank cryptocurrency news SEC Security and Exchange Commission JPMorgan Banks