CME Group CEO on Bitcoin, JP Morgan, and Role of Governments

On Thursday (February 14th), Terry Duffy, the Chairman and CEO of CME Group, spoke in an interview with Bloomberg Television about Bitcoin, JPMorgan Chase, and the importance of the involvement of governments in the growth of the crypto space.

CME Group is comprised of four Designated Contract Markets (DCMs): CME, CBOT, NYMEX, and COMEX. Through these derivatives exchanges, "CME Group offers the widest range of global benchmark products across all major asset classes, including futures and options based on interest rates, equity indexes, foreign exchange, energy, agricultural products and metals."

On 1 December 2017, CME Group announced that it had "self-certified the initial listing of its Bitcoin futures contract," which would launch on 18 December 2017, eight days after the launch of Cboe's bitcoin futures product. Here is what the CME Group CEO had to say at that time:

"We are pleased to bring Bitcoin futures to market after working closely with the CFTC and market participants to design a regulated offering that will provide investors with transparency, price discovery, and risk transfer capabilities. Though we have worked through a lengthy, comprehensive process with the CFTC to get to this point, we recognize bitcoin is a new, uncharted market that will continue to evolve, requiring continued collaboration with the Commission and our clients going forward. At launch, our new Bitcoin futures contract will be subject to a variety of risk management tools, including an initial margin of 35 percent, position and intraday price limits, and a number of other risk and credit controls that CME Group offers on all of its products."

In Thursday's interview with Bloomberg Television, around the time that Bitcoin (BTC) was trading at $3,574, Duffy was asked about "his take on the institutional demand" for Bitcoin:

"Is institutional demand there? Is it rebounding? Is it hitting some sort of bottom, Terry?"

Duffy replied:

"I'm not quite sure. I was a big believer that we needed to go forward and list Bitcoin in some shape or form, but also understanding that this is a brand new asset class that has come in to the marketplace, [and] so you need to be able to walk before you run. So, we put a lot of controls that we don't have on certain products on Bitcoin. So, I think that was important. So, the bottom line is, I think, until governments really start to accept cryptocurrencies of some way, shape, or form, it's going to be very difficult for the major commercials to come in here and really get gung-ho on Bitcoin or any other cryptocurrency. So, we'll have to do a wait-and-see. You know, I think JP Morgan has done a little bit of, I don't want to say an about-face, but I would say they were pessimistic on the whole idea of Bitcoin a couple of years ago, now they're coming up with some offerings... Goldman Sachs has [gone] the same way... But I think the key to the success of any currency, whether it is fiat or crypto, is going to be associated with the governments. So, I think the government will need to be more involved."

 

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