Wall Street banking institutions are warning about the hazards of bitcoin futures.
The Futures Industry Association, which represents big banks and brokers, has warned U.S. regulators that the risks of trading bitcoin futures contracts have not been correctly studied.
In an open letter to the U.S. Commodity Futures Trading Commission, the FIA said that the speedy documentation of bitcoin futures does “not enable proper public transparency and input.”
The Chicago Mercantile Exchange and the Chicago Board Options Exchange plan to get started on listing the contracts soon after this month. The Nasdaq will release its own bitcoin futures in 2018.
Analysts mention that announcements from the exchanges have helped propel bitcoin prices to new heights, since the moves were viewed as indicators that big mainstream traders are becoming interested.
Bitcoin (XBT) prices have gained over $4,000 during the past 48 time to smash through $16,000.
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The FIA, which counts Goldman Sachs (GS) and Morgan Stanley (MSPRF) among its members, can be involved that exchanges regulated by the CFTC have already been permitted to “self-certify” their new bitcoin contracts.
The decision will leave regulators with limited time to examine futures offerings.
The FIA said a “more thorough and considered process” could have allowed exchanges and clearinghouses more time to study trading limits and other ways to protect against price swings.
The group is worried that its users, which act as intermediaries between buyers and sellers, could possibly be left positioning the bag if something goes wrong.
“The recent volatility in these marketplaces has underscored the value of setting these amounts and operations appropriately and conservatively,” the group said in its letter.
“We remain apprehensive with having less transparency and regulation” of bitcoin and “whether exchanges include the proper oversight to ensure [bitcoin is] not susceptible to manipulation, fraud, and operational risk,” it said.
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The CFTC has itself warned investors about the hazards of bitcoin, noting that cryptocurrency exchanges are generally unregulated and outside the agency’s purview.
“Bitcoin … is definitely a commodity unlike any the commission offers dealt with during the past,” CFTC chairman J. Christopher Giancarlo said in a declaration on December 1.
“Investors should be aware of the potentially advanced of volatility and risk found in trading these contracts,” the agency added.