While bitcoin enthusiasts are bracing for the much-anticipated investor acceptance of digital currency when futures trading starts this weekend, the world’s biggest banks have reportedly halted the move.
The Futures Industry Association (FIA) has sent a cautionary draft letter to the Commodity Futures Trading Commission (CFTC), which approved the start of bitcoin futures trading last week. The lobby group, which includes all the large Wall Street banks, warned the regulator over a swift launch of bitcoin futures that “did not allow for proper public transparency and input,” the Financial Times quotes the letter as saying.
The price of bitcoin has surged to another record of over $15,000 on Thursday, with the market value of the digital currency now exceeding $250 billion, according to data from CoinMarketCap.
The FIA reportedly stressed that ill-prepared financial system wouldn’t cope with the increased volatility of the cryptocurrency's price.
Last week, NASDAQ announced plans to launch bitcoin futures in 2018. Earlier, the Chicago-based exchanges CME and Cboe said they would start bitcoin futures trading on December 17, as the CFTC had approved the step.
The draft letter, obtained by the media, allegedly claims the exchanges should not be allowed to operate bitcoin futures under a self-certified regime as regulators will have minimal time to formally review them.
“A self-certification scheme for these novel products does not align with the potential risks that underlie their trading and should be reviewed,” the letter says.
“We remain apprehensive with the lack of transparency and regulation of the underlying reference products on which these futures contracts are based and whether exchanges have the proper oversight to ensure the reference products are not susceptible to manipulation, fraud, and operational risk,” the FIA said in the draft.