Banking giants sound warning over Bitcoin futures’ lack of transparency

SOME of the world’s biggest banks have pushed back against Bitcoin, warning of “potential risks” just as futures trading in the digital currency is due to begin.

The Futures Industry Association, whose members include the major Wall Street and UK banks, warned of a lack of transparency over how the contracts would be regulated, as well as the unpredictability of the underlying cryptocurrency.

“We remain apprehensive with the lack of transparency and regulation of the underlying reference products on which these futures contracts are based,” the FIA said in an open letter to the Commodity Futures Trading Commission, the US market regulator.

It added that it was unsure “whether exchanges have the proper oversight to ensure the reference products are not susceptible to manipulation, fraud, and operational risk”.

Tomorrow, the Chicago Board Options Exchange (CBOE) will launch the first Bitcoin futures market, in what is seen as a landmark moment that will help usher in the cryptocurrency’s mainstream acceptance. The CBOE and Chicago Mercantile Exchange, which will launch a week later, have both won approval from the CFTC to operate under a self-certified regime.

The FIA said that the inherent riskiness associated with cryptocurrencies made this irresponsible.

It came despite Jamie Dimon, the CEO of JP Morgan and one of the most vocal Bitcoin critics of late, appearing to soften his criticism of cryptocurrencies. “I’m open-minded to uses of cryptocurrencies if properly controlled and regulated,” he told CNBC.

Bitcoin’s price was hovering above $15,000 (£11,200) yesterday, down from the $17,000 highs on Thursday.