JPMorgan launching ‘crypto exposure basket’ featuring MicroStrategy and Square

The financial services giant has filed paperwork with the SEC to launch a debt instrument linked to 11 crypto-focused firms.

JPMorgan Chase has designed a new debt instrument that provides investors direct exposure to a basket of crypto-focused companies, according to a new filing with the United States Securities and Exchange Commission, or SEC.

JPMorgan’s Cryptocurrency Exposure Basket (Mar 2021) is described as an “unequally weighted basket consisting of 11 Reference Stocks of U.S.-listed companies” that operate businesses directly and indirectly related to cryptocurrencies.

The instrument allocates 20% to MicroStrategy, the data analytics firm with 91,064 BTC on its balance sheet. It also provides direct exposure to Square (18%) and Riot Blockchain (15%), two companies with significant exposure to Bitcoin. Nvidia Corporation and PayPal Holdings each account for 15% of the basket.

Advanced Micro Devices, Taiwan Semiconductor Company, Intercontinental Exchange, CME Group, Overstock.com and Silvergate Capital are also included in the basket.

The prospectus states:

“The weights of the Reference Stocks were determined based in part on exposure to Bitcoin, correlation to Bitcoin and liquidity.”

JPMorgan says payouts are based on how the basket of companies performs. The minimum investment is $1,000 with a maturation date of May 2022.

The new product represents one of many ways institutional investors can gain access to the high-flying cryptocurrency market. Wall Street is already flocking to digital currencies, which largely explains the strong price support underlying Bitcoin. The flagship digital currency traded as high as $54,888 on Tuesday, according to TradingView. 

If the recently launched Purpose Bitcoin exchange-traded fund is anything to go by, traditional investors have a strong appetite for digital assets. The Canadian ETF saw nearly $100 million in volume during its debut earlier this month, putting it on track to exceed $1 billion in assets after the first week.