The founder and chairman of electronic brokerage firm Interactive Brokers has said that while bitcoin is a great idea it should stay away from the ‘real economy.’
Hungarian-born American entrepreneur Thomas Peterffy, who some call ‘the father of high-speed trading,’ claims he isn’t against trading the digital currency. Yet, earlier this week the billionaire wrote a letter to J. Christopher Giancarlo, chairman of the Commodity Futures Trading Commision, warning of the dangers associated with the cryptocurrency.
According to CNBC, he is reported as saying:
I think bitcoin and other cryptocurrencies are great ideas.
Yet, in his letter, he writes that:
As a CME clearing member, we are deeply concerned with proposals that would allow bitcoin and other cryptocurrency derivatives to be cleared in the same clearing organization as other products.
Instead, he asks that the Commission requests any clearing organization that wishes to clear any cryptocurrency or derivative of a cryptocurrency to do so in a separate clearing system. In his opinion, there is no fundamental basis for the valuation of bitcoin or the cryptocurrency market. This, he says, has been illustrated by the fact that bitcoin’s price has increased by nearly 1,000 percent in 2017.
Cryptocurrencies do not have a mature, regulated and tested underlying market. The products and their markets have existed for fewer than 10 years and bear little if any relationship to any economic circumstance or reality in the real world.
During his letter, Peterffy was also reacting to the news from Terry Duffy, CEO and chairman of CME Group, who announced at the end of October that a bitcoin futures would be launched by the end of 2017, pending regulatory approval. According to Peterffy, this could ‘destabilize’ the system, adding:
If the Chicago Mercantile Exchange (CME) or any other clearing organization clears a cryptocurrency together with other products, then a large cryptocurrency price move that destabilizes members that clear cryptocurrencies will destabilize the clearing organization itself and its ability to satisfy its fundamental obligation to pay the winners and collect from the losers on the other products in the same clearing pool.
Peterffy is of the opinion that unless the risk of clearing cryptocurrency is isolated, a catastrophe in the digital currency market that destabilizes a clearing organization will ‘destabilise the real economy.’ The only way that this can be prevented is by putting them in a separate clearing system away from other products, he says.
Featured image from YouTube/CNBC.
Last modified: June 11, 2020 10:05 AM UTC