Despite CEO Jamie Dimon's vocal distrust of all things cryptocurrency, JPMorgan Chase & Co., has announced that it will provide all wealth management clients access to invest in digital assets. On July 19, JPMorgan changed the policy to include all clients from self-directed clients using the Chase trading app to the most affluent tier of clients served by the private bank.
As the first major U.S. bank to provide this access, JPMorgan’s $630 billion wealth management division can now accept orders to buy and sell five crypto products. The products are Grayscale’s Bitcoin Trust, Bitcoin Cash Trust, Ethereum Trust, Ethereum Classic products, and Osprey Funds’ Bitcoin Trust. While clients have access to these digital assets, they have to ask prior to making any trades. Also, advisers aren't allowed to recommend crypto products.
Access to crypto markets through "cryptocurrency exposure baskets."
Previous to the policy change, JPMorgan only let private wealth clients invest in an actively managed Bitcoin fund, with crypto firm NYDIG providing custody services. After BTC hit its all-time-high price of $65,654 in April, many investors were interested in the surging cryptomarkets.
In March, JPM launched its BTC proxy stocks with the launch of crypto exposure baskets—a debt instrument that leaned heavily on companies like MicroStrategy, Square, and Riot Blockchain. With positions in 11 companies total, these “basket companies” were the ones that JPMorgan thought were directly or indirectly engaging cryptocurrencies or other digital assets, according to the prospectus. Priced at a minimum of $1,000, the payout would be based on the basket companies’ performance less a 1.5 percent deduction, which is essentially the fee.
JPMorgan clients demand more exposure
Simmering down from threatening to fire employees, Dimon is realizing the increased interest and development in cryptocurrencies. At the risk of disappearing, many other big-name institutions like Goldman Sachs, Morgan Stanley, and Wells Fargo, are understanding the use case for digital assets is only increasing. With many looking to potentially invest, institutions are catering their services and products to fit clients' needs.
Many of JPMorgan's clients view digital currencies as an asset class that they wanting to invest in. Although Dimon and the CEO of Wealth JPMorgan Asset & Wealth Management, Mary Callahan Erdoes, are personally against cryptocurrency, they can't deny where clients' interests are. Understanding that blockchain is continually developing and may "...have great financial implications to how we digitally interact in different financial markets," Erodes explained, is why many investors are wanting more exposure.
While rivals like investment bank Goldman Sachs and the world's largest asset manager, BlackRock, speculate that cryptocurrencies are a new asset class, JPMorgan is the first U.S. bank providing this access. It has also been noted that at no other time in history has JPMorgan advised or noted cryptocurrencies in any prospectus. Although hesitant, JPMorgan provides thorough resources and tools to assist potential investors in the rising market. Only time will tell where this policy change might lead. Will JPMorgan be the bank that furthers the decentralized revolution?