In a filing with the SEC yesterday, JP Morgan Chase & Co. announced that it has set up a structured investment vehicle that gives its clients exposure to cryptocurrencies.
The company explained that “the notes are unsecured and unsubordinated obligations of JPMorgan Chase Financial Company LLC,” adding that the payment is “fully and unconditionally guaranteed by JPMorgan Chase & Co.”
JPMorgan further explained that:
“The notes are designed for investors who seek exposure to the performance of the J.P. Morgan Cryptocurrency Exposure Basket (Mar 2021) of 11” unequally weighted stocks, which we refer to as the basket, as reduced by the basket deduction of 1.50%.”
The behemoth bank also mentioned in its announcement that:
“Notwithstanding the name of the basket, the notes do not provide direct exposure to cryptocurrencies and the performance of the basket may not be correlated with the price of any particular cryptocurrency, such as bitcoin”
JPM explained that the reference stocks in its basket represent the common stocks of “11 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.”
These cryptocurrency-related platforms include Microstrategy’s Class A common stock, Square’s Class A common stock, Riot Blockchain’s common stock, Nvidia’s common stock, Paypal Holdings’ common stock, and Advanced Micro Devices’ common stock.
Sales Details of the Notes
The minimum investment for the new product is $1,000. The notes will hit the market on March 31, and sales will likely end by April 6.
JPMorgan further elaborated that “the weights of the reference stocks were determined based in part on exposure to bitcoin, correlation to bitcoin, and liquidity,” adding that “the basket may be subject to extreme price volatility and rapid and substantial decreases in price over the term of the notes.”
This undertaking is a significant event for the company considering that just about three years ago, Jamie Dimon—the CEO of the bank—called bitcoin a fraud. Also, JPM recently advised investors to place 1% of their total portfolio in cryptocurrency, highlighting how far the company has come.
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