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Decrypting JP Morgan’s crypto investments

Finance

protos.com 26 September 2022 14:10, UTC
  
Reading time: ~3 m

Last week at a Congress hearing, JP Morgan chairman and CEO Jamie Dimon described cryptocurrencies and Bitcoin in particular as “decentralized Ponzi schemes.”

But despite Dimon’s longstanding opposition to digital currencies, the bank that he runs has a history of dabbling with crypto.

As of last year, JP Morgan allowed its private clients to purchase Bitcoin and other cryptos from a selected number of funds, namely, Grayscale Bitcoin Trust, Grayscale Bitcoin Cash Trust, Grayscale Ethereum Trust, Grayscale Ethereum Classic Trust, and Osprey Bitcoin Trust.

This was around the time that the bank was building a small bet on Coinbase. According to its annual report, it had built a small position in the US-based exchange by June of last year. Its US Growth Fund owned 3,025 Coinbase shares, valued at $758,247, comprising 0.04% of the fund.

It also held 44,900 Coinbase shares, valued at $11,254,634 in its US Technology Fund, and also owned Coinbase bond coupons at 0.5% maturing in 2026 in its Multi-Manager Alternatives Fund. In total it had $15,448,631 worth of investments in Coinbase.

By December 2021, JP Morgan had slightly decreased its Coinbase holdings.

  • The bank had 525 shares, valued at $118,986 and comprising 0.02% of its Global Research Enhanced Index Equity Fund.
  • It held 45,800 shares valued at $11,774,951 comprising 0.17% of its US Technology Fund.
  • The company also sold its 3,025 shares of its US Growth Fund.

During this time, the company also added more bonds to its coffers. Specifically, $235,000 worth of Coinbase bond coupons for its Global Bond Opportunities Sustainable Fund, $385,000 of the same kind of bond coupons for its Global Strategic Bond Fund, another $1,228,000 for its Income Fund, and $80,000 worth of coupons for its US High Yield Plus Bond Fund.

In all, by December 2021, JP Morgan’s funds held $18,189,467 worth of Coinbase shares and bonds.

Then, by June this year, the company sold all its Coinbase shares — presumably at a loss, given that Coinbase shares have plummeted since the beginning of the year. However, it retained some Coinbase bonds.

In total, as of late June, the company’s funds held $9,490,094 worth of Coinbase bonds that it had bought for a total of $16,274,000. However, this figure pales in comparison to the firm’s $55 billion total net assets under management.

Read more: ConsenSys lawsuit reveals JPMorgan owns critical Ethereum infrastructure

JP Morgan also dabbles in private crypto investments

JP Morgan also has a number of private investments in the crypto industry such as its stake in crypto analytics firm TRM Labs. It also has some tenants from the crypto industry in its real-estate portfolio, including Coin Cloud which rents a property from JP Morgan’s Moonwater Office Portfolio Properties.

However, the bank may have been hiding the extent of its involvement in the private investment part of the crypto industry. Lately, it’s been accused by ConsenSys shareholders of owning a share of the intellectual property rights for MetaMask and Infura that were exchanged by ConsenSys CEO and founder Joseph Lubin against an offset of a $39 million loan.

JP Morgan is not actively involved in crypto as much as Morgan Stanley, but it’s not shying away from dipping its toes in the market and certainly doesn’t seem keen to refuse money from the industry.

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