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Major Banks Block Customer Access to Sunday Bitcoin Futures

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The big banks are not rushing to facilitate investment in the first bitcoin futures market to be launched on Sunday. Citigroup Inc. and Bank of America Merrill Lynch told their customers that they would not provide access to the future bitcoin of the cboe that will be available Sunday, according to the Wall Street Journal.

Goldman Sachs Group Inc., the largest US futures broker, would only provide access to certain clients. According to an email, ABN Amro Group will also process transactions for a select group of customers.

Societe Generale SA and Morgan Stanley have not finalized their approach, according to sources interviewed on Thursday.

Banks play a key role

For many investors, banks play a key role in gaining access to new markets.

Banks' hesitation could jeopardize the anticipated launch of bitcoin, which cryptocurrency advocates see as a key step in the evolution of cryptocurrency. Cboe Global Markets Inc. expects to launch its bitcoin futures on Sunday, less than two weeks after the project's approval by the regulators. CME Group Inc., also in Chicago, will launch Bitcoin futures on December 18th.

Cboe did not publish a list of banks that will manage his future bitcoin, citing confidentiality, but said the contracts would proceed as planned.

Bitcoin surpassed the $ 16,000 mark Thursday, a $ 4,000 gain in one day.

Wall Street Faces Choices

The soaring Bitcoin has made it difficult for many on Wall Street to ignore it, despite concerns over its links to illegal activities and its faltering legal status. Banks want to manage their risks but can not ignore the interest of investors.

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A trader must open an account with a brokerage firm, which could be liable for losses. Many brokers are struggling with a way to manage bitcoin term risks because of its volatility. Banks serve as a buffer for counterparties in their role as futures brokers.

Brokers, evaluating futures on bitcoins, must consider their relationships with customers and decide if they should charge higher fees to "support" Bitcoin futures trading. This is a difficult task considering the volatility of bitcoin.

The stock exchanges set minimum margin requirements that traders must post in cash to enter a future bet. The exchanges were therefore faced with the same challenge. Cboe said Monday that its clearing house has raised the minimum of 33% to 44% because of the volatility of bitcoin in recent days.

The minimum of CME is 35% on contracts. The exchange could adjust this level in response to volatility, said a spokesman for the MEC.

Typhoon Capital Management, a hedge fund company, will negotiate Cboe's Bitcoin futures in one of its funds. James Koutoulas, CEO, said only three of the 12 brokers with whom the fund deals gave them permission to trade bitcoin futures.

The Bank's clients include institutional investors and larger hedge funds. According to Craig Pirrong, a professor of finance at the University of Houston, such actors may have trouble accessing Cboe's future, which would undermine commercial activity in the new Cboe market.

Small brokers see the occasion

The reluctance of some banks has created an opportunity for smaller brokers such as Wedbush Securities Inc. and Phillip Capital Inc. to offer access to bitcoin futures.

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Bob Fitzsimmons, managing director of Wedbush's futures arm, said this window has created an opportunity with customers that the company has been courting for several months.

Interactive Brokers Group Inc. will offer customers access to Cboe's term bitcoin for "long" traders who are betting on a bitcoin price hike, according to CEO Thomas Peterfly. This would protect the brokerage if bitcoin futures were skyrocketing and causing losses among "short-term" traders by betting on falling prices.

A spokesman for Goldman Sachs said that since the future bitcoin is a new product, the company is doing due diligence.

Read also: Wall Street bankers revolt against the launch of the bitcoin futures contract

Brokers Group Raises Concerns

The FIA, which represents the major futures brokers, said it was concerned about the risk of bitcoin futures.

The FIA ​​told the TCRC that the regulator did not allow proper public transparency and contribution to the review of Cboe's and CME's bitcoin futures proposals.

A spokesman for the CFTC said that the agency agrees that bitcoin is a merchandise like no other that the commission has addressed.

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