Increased Demand in Crypto has Citigroup Considering Offering its Biggest Clients Bitcoin Futures Trading

Citigroup is now considering whether to offer its biggest clients the option to trade in Bitcoin futures, citing increased demand in the cryptocurrency space.

According to the reports, the banking giant is currently awaiting approval to begin trading CME Bitcoin futures.

According to a Financial Times report, the bank first started weighing the option of providing crypto-related services in May.

“Our clients are increasingly interested in this space, and we are monitoring these developments,” Citigroup said in a statement this time.

Other banking giants JPMorgan, Morgan Stanley, Wells Fargo, and Goldman Sachs, are also working on allowing all of their wealthy clients access to cryptocurrency funds.

Citibank further said they are currently only considering futures for some of its institutional clients due to the fact that they operate under strong regulatory frameworks. The bank is basically being “very thoughtful” of how they approach the crypto industry due to many unanswered questions around regulatory frameworks, supervisory expectations, and other factors.

Sights on the Regulated Product

Bitcoin futures are also presently the popular product for exchange-traded funds (ETFs) to be based on after SEC Chair Gary Gensler signaled that he is more open to a futures-backed Bitcoin ETF under the 1940 Act, which offers more investor protection instead of physically-backed ETF that are filed under the 1930 laws that allow stock exchanges to list products.

Tennessee-based Valkyrie Investments is one of the firms to file for the Valkyrie XBTO Bitcoin Futures Fund that would be listed on the Nasdaq exchange. Their request was only revealed on Tuesday as smaller issuers are allowed to file confidentially for new offerings.

“We still thought a physical bitcoin ETF was a little further away and, with futures, the way they are regulated and the way they trade with the CME, they are already. It is a regulated product. So it’s kind of a one-step, two-step way to get a physical ETF, but we thought there were a lot of opportunities with futures,” said Steven McClarge, CIO at Valkyrie Investments, in an interview.

While Valkyrie is the first to file for a futures-backed Bitcoin ETFs, several others have filed since Gensler’s statement, with two dozen filing sitting at SEC’s desk for approval.

“The SEC is trying to be cautious here – which they should be doing,” McClarge said.

“While I believe the market is ready for physically backed ETFs, I know they are trying to be extra cautious before putting anything in the market that could hurt retail investors, and that is their reason to do so.”

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