JP Morgan mulls cryptocurrency transaction among clients
US bank JP Morgan Chase could be the first lender in America which could allow crypto transaction among its clients. This as the bank is mulling to issue debt linked to cryptocurrency-focused companies.
JP Morgan Cryptocurrency Exposure Basket, the incoming debt instrument, is thinking about MicroStrategy (20 percent) Square (18 percent), Riot Blockchain (15 percent) and chipmaker NVIDIA (15 percent) with positions in a total of 11 companies. It, however, does not invest directly in cryptos, according to its prospectus.
The basket companies “operate businesses that we believe to be, directly or indirectly, related to cryptocurrencies or other digital assets, including as a result of bitcoin (BTC, up by 0.3 percent on Friday) holdings, cryptocurrency technology products, cryptocurrency mining products, digital payments or bitcoin trading,” Coindesk quoted from JP Morgan’s prospectus.
This reveals yet another way the Wall Street players are looking to give their clients access to the booming crypto market, which according to CoinGecko is estimated at $1.7 trillion.
The prospectus documents state the notes will pay out based on the basket companies’ performance minus a 1.5 percent deduction, which is essentially the fee. They cost a minimum of $1,000 minimum and have a maturation date of May 2022.
This is the first time JP Morgan has taken the step. A look at the bank’s regulatory filings in the past indicates that it has never issued notes related to the performance of crypto companies.
Engineers at JP Morgan have created ‘JPM Coin’ — a digital token — that will be used for transactions among the clients of its wholesale payments business. Only a tiny fraction of the payments will initially be transmitted using the cryptocurrency, but the trial represents the first real-world use of a digital coin by a major US bank, reports CNBC.
A few weeks ago, JP Morgan Chase had published a report apprehending that traditional financial companies are at risk of falling behind in the digital space.