Bitcoin cleared for trading
Publish date: 06 December 2017
Issue Number: 1712
Diary: Legalbrief eLaw
A US regulator on Friday cleared the way for bitcoin futures to trade on major exchanges, but warned investors the digital currency is prone to elevated risk and volatility. A report on the Fin24 site notes that the decision opens the door for the Chicago Mercantile Exchange and CBOE Futures Exchange to offer contracts for futures of the virtual currency, rather than trading the actual currency. The deal with the Commodities and Futures Trading Commission agency also enables Cantor Exchange to offer bitcoin options, another type of derivative contract, which allows for trading without taking ownership of an underlying asset. CFTC chair Christopher Giancarlo said the agreement with the exchanges does not mean the CFTC endorses the digital currency or the various trading products. The announcement followed Federal Reserve governor Randal Quarles’ warning that digital currencies like bitcoin could pose a threat to financial stability as they gain wider use because of the uncertainty of how they would fare during a crisis.
At Melt Bakery, a hole in the wall that sells ice cream sandwiches in New York's upscale Manhattan neighbourhood, you can pay for your guilty pleasure in bitcoin. And while a few swipes of a mobile app are all it takes to fill your electronic wallet, the novelty comes at a hefty cost. At Melt's checkout counter, each transaction can take several minutes to process and trigger varying fees. That means a $5 chocolate ice cream sandwich costs $9.29 for a recent bitcoin purchase. A report on the Fin24 site notes that Nick Allen, head of product development at the Blockchain Technologies start-up, acknowledges such use is limited. ‘Bitcoin will never be used largely in real life. Transaction fees are too high and an owner is not able to track the transactions made by its employees.’ A bitcoin which was worth about $1 000 at the start of the year is now more than $10 000.