As Brokers Line Up to Offer Bitcoin Futures, Others Are Quiet

(Bloomberg) -- U.S. brokerages have a decision to make. Will they offer futures contracts tied to bitcoin -- the cryptocurrency viewed as a gold mine or bubble -- to clients?

TD Ameritrade Holding Corp. and Ally Financial Inc.'s Ally Invest said they will offer the instruments to customers once they become available. Fidelity said it currently has no plans to do so. Other major firms declined to comment.

Bloomberg began asking firms about their intentions in the weeks before CME Group Inc. and Cboe Global Markets Inc. announced Friday that they've cleared hurdles to offer bitcoin futures. CME will start trading them Dec. 18, while Cboe hasn't specified when it will begin. The Commodity Futures Trading Commission conferred with the exchanges as they set terms for the products, and the pair will work with the agency to keep tabs on the spot market for bitcoin.

Public interest in the digital coin has exploded this year, at times driving prices beyond $11,000. The new contracts promise to make it easier for mainstream investors to place bets on the volatile cryptocurrency's rise -- or collapse.

“What's exciting to us about it is it provides a two-sided market,” JJ Kinahan, chief market strategist at Omaha, Nebraska-based TD Ameritrade, said in an interview last month. “With natural buyers and sellers, that helps to put a more reasonable volatility on the product.”

Futures that are offered on a highly regulated exchange may offer more individual investors the chance to get involved in the bitcoin world without some of the risks associated with trading and holding the underlying asset. Many cryptocurrency exchanges are largely unregulated and some have suffered from security and technology lapses.

“Ally Invest customers have specifically expressed interest in the futures product the Chicago Mercantile Exchange is planning to launch that is based on bitcoin,” Rich Hagen, the brokerage's president, said in an emailed statement Nov. 28. “If the CME does launch this product, Ally Invest plans to offer it to current and new futures customers immediately.”

Boston-based Fidelity doesn't currently have any plans to offer bitcoin futures trading for its brokerage customers, spokesman Steve Austin said. For clients who do trade or own cryptocurrencies, they can link with their Coinbase account and monitor their portfolio on the Fidelity site.

Bank of America Corp.'s Merrill Lynch and Morgan Stanley declined to comment on whether they will offer bitcoin futures. Before Friday, Charles Schwab Corp. and E*Trade Financial Corp. declined to comment. They didn't respond to additional messages after the CME and Cboe announcements.

To contact the reporter on this story: Brian Louis in Chicago at blouis1@bloomberg.net.

To contact the editors responsible for this story: Nick Baker at nbaker7@bloomberg.net, David Scheer, Steven Crabill

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