- Wells Fargo is an American multinational financial services company with corporate headquarters in San Francisco, California.
- JP Morgan Chase is a global leader in financial services and investment banking.
- Wells Fargo has launched a private Bitcoin fund for wealth investors whereas JP Morgan Chase announced its new product in partnership with NYDIG.
What did NYDIG announce?
Wells Fargo is an American multinational financial services company with corporate headquarters in California. The company recently announced that it has launched a private Bitcoin fund exclusive to its wealthiest clients. These wealthy clients account for Wells Fargo’s top clients who demanded access to this new asset class.
The company has also mentioned that the fund will be a passive fund, not open to all. This implies that the institution is offering this fund as a prototype. If the fund attracts heavy investment, the company may open the fund to each one of their clients.
Another big bank, JP Morgan Chase announced its partnership with NYDIG to launch a Bitcoin exchange-traded fund for its clients. NYDIG filed a prospectus with the Securities and Exchange Commission seeking approval for its exchange-traded fund.
What is the new product offered in partnership with NYDIG?
The exchange-traded fund will be listed on the American stock exchange after receiving approval from the Securities and Exchange Commission. The SEC has a rocky history with approving cryptocurrency related funds. It has yet to deliver a decision of the Vaneck Mutual fund and it is known that the regulatory body has been using its discretion to delay it as much as possible.
The exchange-traded fund will be launched in partnership with the aforementioned banks. The trust will not imitate or follow any specific index. It can invest in the digital asset as per their risk tolerance policy and client’s interests. Investors seeking to allocate this fund in their portfolio can do so when the ETF is listed on the exchange. The investors will then be able to buy and sell the Trust’s shares through their brokerage account.
Shareholders of this trust will stand to gain as the value of Bitcoin appreciates after deducting the Trust’s fees and other brokerage expenses. Currently, the only company authorized to buy its unlisted shares is Morgan Stanley. Thus, this fund is endorsed by almost all of America’s investment banks, namely Morgan Stanley, JP Morgan Chase and finally Wells Fargo.
Are there risks involved?
- The NYDIG company has laid down a number of risks that it deemed appropriate for its fund’s operability. Here are some of the risks mentioned by the company that investors should consider before investing in its shares.
- Bitcoin is a revolutionary object, unfortunately it is not unique as there are various altcoins floating in the market which have the potential to perform functions better than Bitcoin.
- Government legislation and taxation policies which restrict the growth of Bitcoin and investor’s attitudes, affect its value and consequently the trust’s shares.
- Changes in macro-economic trends such as recessions and depressions affect the price of Bitcoin. Owing to the prevailing boom in the global market, a drawdown is imminent.
- The maintenance and mining of Bitcoin is very expensive and not at all ecological at all. Such problems may induce users to switch to other coins as safe havens.
What are the benefits of this product?
- The launch of this product subject to the SEC’s approval has many upsides to Bitcoin’s market. Following are the benefits that will be enjoyed by investors:
- This product is proof that big banks such as JP Morgan Chase, Wells Fargo and Morgan Stanley endorse the use of Bitcoin. Investors who follow the actions of institutions can invest in Bitcoin.
- The assets held by the Trust will be in the custody of Delaware Trust Company. Thus, no third party or hackers can access these digital assets.
- The investors can access Bitcoin without having to purchase it themselves.
- It offers convenience as investors need not open a new account with a cryptocurrency exchange. People can buy and sell their shares through their brokerage account.
- The shares of the trust are highly liquid. Investors can liquidate their holdings and receive their funds within a day or two.