JP Morgan Chase, the world’s most valuable American bank, has recently created a new debt instrument that provides selected investors with direct exposure to a basket of crypto-focused firms, according to a new filing with the U.S S.E.C.
The banking juggernaut has designed an instrument known as the Cryptocurrency Exposure Basket (Mar 2021), which is described as an “unequally weighted basket consisting of 11 Reference Stocks of U.S.-listed companies” that operate companies, directly and indirectly, related to crypto.
The new financial asset class allocates about 20% to MicroStrategy, the business intelligence firm with 91,064 BTC on its balance sheet.
It also provides direct exposure to Square (18%) and Riot Blockchain (15%), two companies with some exposure to Bitcoin. Nvidia Corporation and PayPal Holdings each account for 15% of the basket.
Key highlights of this new financial instrument include:
- Issuer: JPMorgan Chase Financial Company LLC, an indirect wholly-owned finance subsidiary of JPMorgan Chase & Co.
- Guarantor: JPMorgan Chase & Co.
- Basket: The notes are linked to the J.P. Morgan Cryptocurrency Exposure Basket (Mar 2021) (the “Basket”), an unequally weighted basket consisting of 11 Reference Stocks of U.S.-listed companies that 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.
- Basket Deduction: 1.50%
- Pricing Date: On or about March 31, 2021
- Original Issue Date (Settlement Date): On or about April 6, 2021
- Observation Date: May 2, 2022
- Maturity Date: May 5, 2022
Recall some months back, JPMorgan Chase gave valuable insights on why it believed the odds were with Bitcoin to keep rising in value.
“Even a modest crowding out of gold as an ‘alternative’ currency over the longer term would imply doubling or tripling of the bitcoin price,” JPMorgan Chase said.
Over time, Bitcoin could be held for other reasons such as for making payments, not just for being a store of wealth as gold is, according to JPMorgan Chase.
“Cryptocurrencies derive value not only because they serve as stores of wealth but also due to their utility as a means of payment. The more economic agents accept cryptocurrencies as a means of payment in the future, the higher their utility and value,” JPMorgan Chase explained.