It’s Official: Bitcoin Is Coming to Wall Street
It’s official: bitcoin is finally coming to Wall Street, and it’s much sooner than you think.
Bitcoin Futures Granted Approval
The U.S. Commodity Futures Trading Commission (CFTC) has granted CME Group permission to issue bitcoin futures beginning Dec. 18. The green light, which was given Friday, came after CME Group pledged that its products won’t undermine federal regulations.
CBOE Global Markets has also announced plans to issue bitcoin futures, but has yet to announce a start date.
Earlier this week, reports indicated that Nasdaq is also planning to roll out bitcoin futures sometime next year. Sources familiar with the matter say the contract will be executed on Nasdaq’s NFXT market, and could become available as early as the second quarter.
Although Nasdaq lacks the punch of a CME or CBOE, it is raising the stakes by adopting a more comprehensive pricing model. Instead of relying on just a few data points, the New York-based exchange will pull pricing data from more than 50 sources provided by VanEck.
In a statement issued Friday, CFTC Chairman Chris Giancarlo said the following:
“Bitcoin, a virtual currency, is a commodity unlike any the commission has dealt with in the past. We expect that the futures exchanges, through information sharing agreements, will be monitoring the trading activity on the relevant cash platforms.”
The CFTC approval means institutional investors on Wall Street can gain exposure to the cryptocurrency through a regulated investment vehicle. According to analysts, this watershed moment could be the next trigger for bitcoin’s meteoric rally.
What’s the Point of Trading Regulated Bitcoin?
One of the chief characteristics of the bitcoin project is that it operates independently of a central authority. It is decentralized and largely unregulated, which means it does not succumb to the same shortfalls as regular fiat money. For some of the purists, efforts to tame bitcoin through regulation defeats the purpose.
Regardless of which side of the debate one sits, the flow of institutional money will likely trigger further price gains for the digital currency. Bitcoin spiked above $11,000 on Friday for the second time this week. That represents a doubling in price since October. It has added more than 2,000% over the last two years, and has the distinction of being the world’s most coveted digital currency. In doing so, it has inspired more than 1,000 other cryptocurrencies. Many more are on the way as startups continue to expand into initial coin offerings.
Where bitcoin goes from here is anyone’s guess. The bulls were fairly certain up to a month ago that prices would cross $10,000 before the end of 2017. Now that we’ve blown past that level, it remains to be seen whether new milestones are on the horizon in the near term.
Long-term valuations on bitcoin range from bust and millions. Such evaluations are normally fueled by things like political ideology and confidence in the traditional banking system.
Disclaimer: The author owns bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term or day-trading.
Featured image courtesy of Shutterstock.