Futures contracts, exchange-traded funds and insider trading are all typical aspects of what Wall Street investors face on a daily basis, and these are exactly the developments currently unfolding in the world of Bitcoin and other cryptocurrencies.
In December 2017, the Chicago Board Options Exchange and the Chicago Mercantile Exchange rolled out Bitcoin futures contracts, financial instruments that allow traders to speculate on the price of the world’s most valuable and controversial digital currency, which is expected to reach an exchange rate of $20,000 by early 2018.
Bitcoin futures proved to be so popular that the CBOE trading platform and the cryptocurrency exchange Coinbase suffered major outages on the Sunday night the contracts were introduced. It should be noted that both CBOE and CME are platforms regulated by the United States Securities and Exchange Commission, and these are not the only regulated instruments that Wall Street is embracing with regard to Bitcoin.
On December 20, the New York Stock Exchange officially filed a petition with the SEC with the intention of listing ProShares, two exchange-traded funds that track the currency exchange value of Bitcoin. Approval of these two ETFs, which will be managed by investment banking firm Brown Brothers Harriman, would bring cryptocurrencies a step closer to full Wall Street legitimacy.
While top executives of investment banking giants such as JPMorgan Chase have gone on record to declare their disdain for Bitcoin, calling it a bubble and even a Ponzi scheme, portfolio managers and stock brokers have been waiting on opportunities such as futures contracts and ETFs because they sell these instruments to clients without actually exposing them to cryptocurrencies and all the risks that they entail.
Aside from ETFs and Bitcoin futures, the strongest indication that cryptocurrencies may soon be welcomed by Wall Street is an ongoing investigation by exchange platform Coinbase into an alleged case of insider trading involving Bitcoin Cash, a digital currency that was created as a compromise due to a lack of agreement between Bitcoin developers and miners about the direction that the original cryptocurrency should be taking.
According to a recent report published by financial news website Marketwatch, the CEO of Coinbase held a press conference to comment on the sudden increase in value of Bitcoin Cash, which recently spiked from $2,800 to $3,800 in just one day. This investigation suggests that Bitcoin exchange platforms are willing to conduct self-regulation.