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Wednesday, Apr 24, 2024

JPMorgan regulatory filings reveal 'basket' product tied to crypto-linked public companies

JPMorgan regulatory filings reveal 'basket' product tied to crypto-linked public companies

JPMorgan appears to be giving its investor clients a way to gain exposure to crypto in the form of public-company stocks involved with digital assets.

A cluster of regulatory filings with the Securities and Exchange Commission indicate that Wall Street investment bank JPMorgan is giving its investor clients a way to gain exposure to crypto in the form of public-company stocks involved with digital assets.

The structured product documentation details so-called "Insight Notes Linked to the J.P. Morgan Basket of Companies with Exposure to Cryptocurrency." The "basket" of companies includes names well-known in the crypto space, including market intelligence firm MicroStrategy, the Jack Dorsey-led payments company Square and PayPal, another payments company that is building support for crypto into its app and earlier this week announced its pending acquisition of crypto security firm Curv.

Other companies in the basket include Riot Blockchain, NVIDIA, AMD, semiconductor giant TSMC (in the form of American depository shares), Intercontinental Exchange, CME Group, Overstock and Silvergate.

JPM stresses in the product description that the exposure provided is not directly tied to any particular cryptocurrency, including bitcoin, and that performance of the notes is not tied to performance in the digital asset market itself. As the documentation explains:

"The notes are designed for investors who seek exposure to the performance of the J.P. Morgan Cryptocurrency Exposure Basket (Mar 2021) of unequally weighted Reference Stocks, which we refer to as the Basket, as reduced by the Basket Deduction of 3.00%. 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."

Per the documentation, the notes carry a pricing date of March 26, an original issue date of "on or about March 31, 2021" with observation and maturity dates on May 2, 2022 and May 5, 2022, respectively.

The existence of the structured product is perhaps another sign that demand among the Wall Street clientele for any kind of exposure to crypto, albeit indirect, is ascendant. A digital asset executive for Goldman Sachs recently spoke to this degree of investor interest around the asset class during a recent podcast appearance.

The developments come soon after JPMorgan distributed an educational deck to clients to help them understand the basics, risks and potential of bitcoin and cryptocurrencies. The distribution took place in February, as previously reported.

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