JPMorgan Chase & Co. (NYSE:JPM) is planning to launch a new product that will give investors exposure to cryptocurrency through eleven Bitcoin proxy stocks.
What Happened: According to a filing with the SEC, the new product is a debt instrument titled JPMorgan’s Cryptocurrency Exposure Basket (Mar 2021), which contains an “unequally weighted” basket of reference stocks that either own cryptocurrency or operate business linked to it.
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The debt instrument allocates 20% to MicroStrategy Incorporated (NASDAQ:MSTR) and 18% to Square Inc (NYSE:SQ) – two companies that declared their Bitcoin investments early on.
Cryptocurrency mining company Riot Blockchain Inc (NASDAQ:RIOT) and cryptocurrency mining chip manufacturer NVIDIA Corporation (NASDAQ:NVDA) were also given a sizable allocation of 15% each.
Together these stocks make up about 68% of the Basket, noted the bank n in the prospectus.
“We expect that generally the market value of your notes and your payment at maturity will depend to a greater extent on the performance of these four Reference Stocks.”
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Other portfolio stocks included Paypal Holdings Inc (NASDAQ:PYPL), Advanced Micro Devices, Inc. (NASDAQ:AMD), and Silvergate Capital Corp (NYSE:SI).
Notably, Tesla Inc (NASDAQ:TSLA) that holds over $1.5 billion worth of Bitcoin, is not on JPMorgan's list.
Why It Matters: A few weeks ago, strategists from JPMorgan endorsed a one percent allocation towards cryptocurrency in a note to clients.
The analysts said that such an allocation would serve as a hedge against inflation in traditional asset classes like stocks, bonds, and commodities.
Whether or not this was done as a precursor to launching more crypto-centric products, the underlying fact is that the Wall Street giant has officially made a U-turn on its previous stance on cryptocurrencies.
In 2017, JPMorgan CEO Jamie Dimon went on record to say that he would fire any trader that buys or sells Bitcoin in a second
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