THE owner of the New York Stock Exchange is taking a wait-and-see approach to bitcoin, even as two of his main competitors prepare for the launch of futures markets based on the fast-rising cryptocurrency.
“We may be stupid for not being first on that,” Intercontinental Exchange Inc. Chairman and Chief Executive Jeffrey Sprecher told a financial conference in New York on Tuesday.
But Mr. Sprecher voiced doubts about the wisdom of being the first U.S. exchange to offer bitcoin futures. Chicago-based Cboe Global Markets Inc. is set to start trading bitcoin futures on Sunday, while CME Group Inc. is following suit a week later.
Futures contracts could shake up the bitcoin market by providing an easy way to “short” the digital currency—to bet that its price will fall.
Mr. Sprecher said the bitcoin market was currently dominated by buyers, not sellers, and it was unclear who would short bitcoin when given the chance. Bitcoin sellers, including “algorithmic guys,” could seize upon the launch of futures to exit big bitcoin positions, the ICE CEO said.
That could lead to blowback against futures exchanges, he added. “I look at that and just say, is that going to work out well for me as a venue?” Mr. Sprecher said.
Mr. Sprecher also suggested that the underlying exchanges where bitcoin is traded are “not particularly transparent” and that it was premature to use them as the basis for a new futures contract.
Both CME and Cboe have partnered with bitcoin exchanges to generate a daily price index, which their planned futures will track. Their announcements that they would launch bitcoin futures were seen as a vote of confidence in the digital currency, whose reputation remains tarnished by its association with illicit activity.
ICE is involved in cryptocurrencies through its investment in Coinbase, a San Francisco-based provider of “wallet” services that people can use to hold bitcoin. NYSE also publishes a bitcoin price index and has unsuccessfully sought to list exchange-traded products tied to bitcoin.
Bitcoin has drawn intense investor interest this year, largely due to an extraordinary run-up in its price. It hit a new record of US$11,860.24 on Tuesday, a more-than 12-fold increase from the beginning of the year, according to CoinDesk. Skeptics call bitcoin a bubble. - WSJ
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