JPMorgan’s CEO might think bitcoin is a “fraud,” but that doesn’t mean the company will preclude the opportunity to reap a profit by helping clients trade bitcoin futures.
According to a Wall Street Journal report, the financial services behemoth is holding conversations about potentially facilitating client trades of bitcoin futures contracts once they launch on U.S. derivatives exchange CME in December.
“JPMorgan is considering whether to provide its clients with access to CME’s new bitcoin product through its futures-brokerage unit,” The Wall Street Journal’s Alexander Osipovich reported, citing one individual familiar with the matter.
At present, JPMorgan’s futures commission merchant is the second largest among U.S. firms, according to Bloomberg. Providing a gateway to CME’s bitcoin futures market would provide throngs of investors with the opportunity to go short — or long — on the price of bitcoin without having to touch the asset itself.
That a Wall Street firm would allow its clients to trade bitcoin futures on CME is not surprising. Many financiers believe that their presence on CME will “tame” bitcoin into a mainstream financial instrument.
But few Wall Street CEOs have been as vocally critical of bitcoin as JPMorgan chief Jamie Dimon. In September, Dimon called bitcoin a “fraud” and threatened to fire any employee caught trading it. Days later, he opined that it was “worth nothing”. The next month, Dimon vowed to stop talking about bitcoin. He kept that vow for a single day because apparently he could not resist the opportunity to lob a few more insults at “stupid” bitcoin investors – a group that includes his own “formerly smart” daughter.
Consequently, to facilitate client trades of a product based on a “fraudulent” asset – cash-settled though the futures may be – will make JPMorgan appear quite hypocritical.
However, to avoid bitcoin futures altogether could cost the company market share down the road if clients transfer their business to other merchants for access to bitcoin futures on CME and CBOE, another U.S. exchange that plans to list bitcoin-derived futures.
The move to process bitcoin futures orders for clients would not be unprecedented. JPMorgan already facilitates client trades of Bitcoin XBT, an exchange-traded note offered by Swedish company XBT Provider that tracks the price of bitcoin.
However, the firm was processing Bitcoin XBT trades long before Dimon began to attract headlines with his bombastic bitcoin-bashing. Given the rigid stance on bitcoin he has conveyed publicly, the fact that JPMorgan is discussing bitcoin futures at all is indicative of the fact that cryptocurrency is “getting harder to ignore“.
Last modified: May 20, 2020 9:25 PM