“Cryptocurrencies do not have a mature, regulated and tested underlying market,” wrote Thomas Peterffy, Chairman of Interactive Brokers. “The products and their markets have existed for fewer than 10 years and bear little if any relationship to any economic circumstance or reality in the world.”
The statement came as part of an open letter to Commodity Futures Trading Commissions (CFTC) Chairman J. Christopher Giancarlo that Peterffy paid to have published as a full-page ad in the Wall Street Journal. The letter had a clear purpose – to request that the CFTC would “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.”
In other words – keep cryptocurrency out of the “real economy”.
Crypto Makes its Way Further Into Traditional Trading Spaces
The warning comes as an apparent response to the announcement of several weeks ago that Chicago Mercantile Exchange (CME) would begin offering Bitcoin futures trading options by the end of the year.
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Peterffy, who has earned a reputation as ‘the father of high-speed trading’, expressed concerns that the untested and volatile nature of Bitcoin and other cryptocurrencies could have detrimental effects on the futures trading market and the economy at large. He explained that a large fluctuation in the cryptocurrency market could compromise an exchange’s “ability to satisfy its fundamental obligation” to distribute funds accordingly to “winners” and collect them from “losers” in a clearing pool.
“Bitcoin and Other Cryptocurrencies Are Great Ideas”, But Need to Stay in Their Place
Despite the warning contained in the letter, Peterffy claims that he has no qualms with cryptocurrency itself, unlike many other notable figures in the financial world. On Wednesday, Peterffy said on Fast Money (CNBC) that he thinks that “bitcoin and other cryptocurrencies are great ideas. They should be allowed to be traded freely and used freely to find their appropriate role in the economy.”
“Appropriate role”, of course, meaning that cryptocurrency trading stay away from the trading of traditional futures assets. In some respects, however, it’s already too late. If CME heeds Peterffy’s warning and decides not to offer crypto futures options, it is only a matter of time before someone else will.
Additionally, it can be argued that bringing cryptocurrency into more traditional spaces as a means-of-exchange and payment could reduce the volatility of the crypto market, the value of which largely depends on how often it is being used. Bank of America issued a statement explaining its feelings: “Given the volatility of the coin markets, maybe there already exists a cadre of participants who would look to short coins on strong days and vice versa, which could overall reduce volatility.”
The reality of the situation is that although cryptocurrency may one day ‘die’, as tons of skeptics believe that it will, that day is not going to come anytime soon. It is becoming an increasingly large part of the global economy whether we like it or not; as such, we can choose to integrate it into our existing financial systems, or to suppress it, and accordingly lose out on the potential benefits that come with it.