JP Morgan has filed with the SEC to launch a debt instrument linked to 11 crypto-focused firms. This new debt instrument is designed to provide investors direct exposure to a basket of crypto-focused companies.
According to the filing, the Cryptocurrency Exposure Basket is described as an “unequally weighted basket composed of 11 Reference Stocks”. These 11 companies operate businesses directly or indirectly related to cryptocurrencies or other digital assets, including: Bitcoin holdings, crypto technology products, crypto mining products, digital payments and Bitcoin trading.
The instrument, if approved by the SEC, will allocate 20% of the basket to MicroStrategy, which currently holds 91,064 BTC on its balance sheet, 18% to Square, 15% to PayPal, Riot Blockchain and Nvidia Corporation. Other companies included in the basket that make up smaller percentages are: Advanced Micro Devices, Taiwan Semiconductor Company, Intercontinental Exchange, CME Group, Overstock.com and Silvergate Capital.
JP Morgan said: “The weights of the Reference Stocks were determined based in part on exposure to Bitcoin, correlation to Bitcoin and liquidity”. MicroStrategy, therefore, received the largest percentage.
The minimum investment will be $1,000 with a maturation date of May 2022, and payouts based on how the basket of companies perform.
JP Morgan is providing its investor clients with an innovative way to gain exposure to crypto in the form of public-company stocks involved with digital assets. If the filing is approved, it can be expected that the Crypto Exposure Basket will see success.