Brokerage Chief: Bitcoin Futures Must Be Quarantined
A well-known electronic brokerage firm is issuing dire warnings against the CME Group's plan to launch a bitcoin futures contract next month.
:format(jpg)/cloudfront-us-east-1.images.arcpublishing.com/coindesk/FGFISLLKJRGXXFMDMVMTUQWB2Q.jpg)
A well-known electronic brokerage firm is issuing dire warnings against the CME Group's plan to launch a bitcoin futures contract next month.
But Interactive Brokers, in a comment letter dated Nov. 14, suggested a way to mitigate the risk it sees from such activity: The Commodity Futures Trading Commission (CFTC), under the auspices of J. Christopher Giancarlo, should sequester systems that handle cryptocurrency derivatives.
"This letter is to request that the Commission require that any clearing organization that wishes to clear any cryptocurrency or derivative of a cryptocurrency do so in a separate clearing system isolated from other products," wrote Thomas Peterffy, chairman of Interactive Brokers.
The open letter, published on the firm's website (and reportedly included in a full-page ad in today's Wall Street Journal), comes on the heels of CME's announcement that it would look to offer cryptocurrency-tied derivatives products. Earlier this week, CME CEO and chairman Terry Duffy indicated that the first product could go live as early as the second week of December.
Yet that outcome would pose a significant danger, Peterffy argued, suggesting that a hypothetical plunge in the price of a particular cryptocurrency could send CME reeling financially.
He went on to write:
Doubling down on the argument, Peterffy went on to write that "a catastrophe in the cryptocurrency market that destabilizes a clearing organization will destabilize the real economy."
"The only way to protect clearing organizations and their members (and the financial system as a whole) from the unique risks inherent in clearing cryptocurrencies is to require that they be cleared in a separate clearing system, isolated from other products," he concluded.
Disclosure: CME Group is an investor in Digital Currency Group, CoinDesk's parent company.
Medical scientist wearing protective clothing image via Shutterstock
DISCLOSURE
Please note that our privacy policy, terms of use, cookies, and do not sell my personal information has been updated.
The leader in news and information on cryptocurrency, digital assets and the future of money, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups. As part of their compensation, certain CoinDesk employees, including editorial employees, may receive exposure to DCG equity in the form of stock appreciation rights, which vest over a multi-year period. CoinDesk journalists are not allowed to purchase stock outright in DCG.
Learn more about Consensus 2024, CoinDesk’s longest-running and most influential event that brings together all sides of crypto, blockchain and Web3. Head to consensus.coindesk.com to register and buy your pass now.