There is indeed a first time for everything. In an unlikely development, US banking behemoth JPMorgan Chase & Co. is exploring offering actively managed Bitcoin (BTC, +1.6%) as an asset class to its wealthiest clients.
The move came as a surprise to industry insiders, given JPMorgan Chase’s CEO very public disdain for bitcoin. The planned investment offer makes JPMorgan the latest and unlikeliest American megabank to ride the bitcoin bandwagon.
Summer rollout expected
Reports say that JPMorgan bitcoin could be available to clients this summer. Based on a Coindesk article, the company has chosen NYDIG, a cryptocurrency, as a custodian for its bitcoin fund.
NYDIG managed to raise an impressive $200 million funding, luring in institutional investors like New York Life, Ridge Holdings Group, MassMutual, FS Investments, Soros Fund Management, FinTech Collective, and Morgan Stanley.
Experts have opined that despite general misgivings, JPMorgan’s decision comes at an opportune time, with the Securities and Exchange Commission (SEC) nearly completing its review of two Bitcoin exchange-traded fund applications. If the SEC approves these funds, it will be more accessible to a wide range of investors.
JPMorgan’s Bitcoin fund will be notably different from existing funds offered by cryptocurrency giants Galaxy Digital and Pantera Capital, which are passive investments. Instead of letting wealthy clients invest in bitcoin without ever handling them, NYDIG will serve as the fund’s gatekeeper.
Compared to passive fare bitcoin investing, actively managed bitcoin funds are more expensive but with higher return potential. Hence, these funds are only accessible to JPMorgan’s high net worth clients.
Giving clients what they want
Insiders claim that the recent Bitcoin offer sees JPMorgan caving in to client clamor. Several investors have already made bullish predictions for Bitcoin, especially following the meteoric rise of the digital asset’s price.
On Monday, Bitcoin gained by 12% and traded at $54,000 – its biggest from February.
Despite these impressive gains, Wall Street banks appear to still struggle with decisions concerning cryptocurrencies. It has remained mum despite the massive popularity of Bitcoin and other digital currencies of late.
Yet the bank was slow to pick up with the trend. It could be remembered that earlier in the year, JPMorgan analysts believed cryptocurrency assets to be a volatile investment, with “questionable diversification benefits.” Yet, following the uptick in Bitcoin price, the bank has changed its tune, even dedicating research to the potential of Bitcoin futures.
However, JPMorgan has made baby steps in accommodating Bitcoin. It added Bitcoin companies Gemini Trust Co. and Coinbase Inc. as their clients the previous year. In 2019, it used blockchain technology to launch digital JPM Coin for corporate payments.
Perhaps the most notable twist in the bitcoin narrative is JPMorgan’s CEO Jamie Dimon. Dimon called bitcoin a fraudulent asset in a controversial statement, even declaring that he will fire any trader who will even consider going into the digital asset.
However, since then, he has relaxed on his tirades. While he considers the government regulating crypto assets unavoidable, Dimon still does not approve of bitcoin.