United States, July 16, 2021 /AlexaBlockchain/ – Bank of America (BofA) is planning to offer Bitcoin futures trading to selected clients, FXStreet reports citing anonymous sources.
The new report comes a weak after the Bank of America created a new dedicated team to research cryptocurrencies and digital assets, marking Wall Street’s latest push to capitalize on investors’ increasing interest in digital assets.
Banks Pushes For Cryptocurrency Offerings Amid SEC Warnings
In fact, SEC last month warned investors about the possible risks in investing Bitcoin and other cryptos, including exposure through Bitcoin futures. SEC said investors to weigh carefully the potential risks and benefits of the investment in Bitcoin.
“Among other things, investors should understand that Bitcoin, including gaining exposure through the Bitcoin futures market, is a highly speculative investment. As such, investors should consider the volatility of Bitcoin and the Bitcoin futures market, as well as the lack of regulation and potential for fraud or manipulation in the underlying Bitcoin market,” SEC said.
Corporation and Institutional Investors Want To Add Digital Assets To Their Portfolios
As clients are looking to exposure in Bitcoin and other cryptos, a number of investment banks have started addressing this new asset class.
In March, Goldman Sachs restarted its cryptocurrency trading desk amid Bitcoin boom after a three-year closure. In May, the investment bank started trading with non-deliverable forwards, and protecting itself from volatility by buying and selling bitcoin futures in block trades on CME Group, using Cumberland DRW as its trading partner.
Commenting on the development, Max Minton, Goldman’s Asia-Pacific head of digital assets, said: “Institutional demand continues to grow significantly in this space, and being able to work with partners like Cumberland will help us expand our capabilities. The new offering is “paving the way for us to evolve our nascent cash-settled crypto-currency capabilities.”
Bank of America will also be using CME futures, according to one of the sources.
Chicago Mercantile Exchange (CME) Group
CME Group, the world’s leading and most diverse derivatives marketplace, launched Bitcoin futures in 2017. In May, CME launched “Micro Bitcoin futures” products, further expanding its suite of crypto derivatives offerings. At 1/10 the size of one bitcoin, Micro Bitcoin futures (MBT) provide investors an efficient, cost-effective new way to fine-tune bitcoin exposure and enhance their trading strategies.
The bitcoin futures market’s total open interest remains around $10 billion, down over 60% from its April 13 peak of $27.3 billion, according to Arcane Research.
Bank of America Changes Its Policy on Cryptocurrency
In 2018, Bank of America imposed a ban on advisors in its Global Wealth unit helping clients invest in cryptocurrencies.
In April, Chief Executive Officer Brian Moynihan hinted on allowing crypto in the future.
“We’re always looking at what’s going on in the market to understand … do we need to rethink our position,” Moynihan told shareholders at an annual meeting.
Price action: Bitcoin traded 1.33% lower at $31,437.32 at press time over 24 hours, while ETH traded 2.05% lower at $1,886.07.