It appears that Citigroup is planning to start trading CME Bitcoin futures.
That is reported by CoinDesk, citing some people who would be familiar with the cryptocurrency derivatives markets.
Summary
Citigroup will offer Bitcoin futures
Rumors claim that the bank is detecting a real surge in requests from their clients to gain exposure to Bitcoin prices and would be actively recruiting new staff for a team focused specifically on cryptocurrencies.
According to CoinDesk, the anonymous source claims that this team will get approval to start trading CME bitcoin futures and later ETNs on Bitcoin.
In other words, the bank would, in fact, be about to make derivative products available to its clients that allow them to take a position on the price of BTC.
A Citigroup spokesperson would later state:
“Given the many questions around regulatory frameworks, supervisory expectations, and other factors, we are being very thoughtful about our approach. We are presently considering products such as futures for some of our institutional clients, as these operate under strong regulatory frameworks.”
Why offer Bitcoin futures
CME’s Bitcoin futures are arguably the preferred tool for institutional investors to speculate on the price of BTC.
They were launched as early as December 2017 and have since been traded on the Chicago Mercantile Exchange (CME), which is the absolute largest futures and options exchange in the world.
By now, the CME is also the largest bitcoin futures trading platform globally, precisely because it is a fully regulated and legally compliant market.
That allows everyone to take a position on the price of bitcoin without having to deal with unregulated assets or exchanges.
Citigroup and the interest in cryptocurrencies
Citigroup is an American investment bank based in New York City that also provides financial services.
It is the third-largest banking institution in the United States, and along with JPMorgan Chase, Bank of America, and Wells Fargo is one of the four large U.S. banking institutions called the “Big Four.”
It is, in fact, a systemically important bank, so much so that it is one of those considered “too big to fail.”
It had over $23.6 trillion in assets under custody in 2020 and has already shown a clear interest in cryptocurrencies for a few months now.
Note that both JPMorgan Chase and Bank of America have shown similar interests lately.
Incidentally, according to Bloomberg ETF analyst Eric Balchunas, the likelihood of an ETF on bitcoin futures being launched by the end of October in the U.S. markets is increasing.
New note out today from @JSeyff re how the Ether ETF withdrawals adds to likelihood that a bitcoin futures ETF will be launched by end of October with ProShares as favorite, altho it could (and arguably should) be a group to avoid first mover advantage. pic.twitter.com/zXFFgmEHw6
— Eric Balchunas (@EricBalchunas) August 24, 2021
While the SEC still seems skeptical about ETFs that directly have BTC as their underlying, there could be a whole different story for those that instead have already regulated products like BTC futures as their underlying.
