Key Takeaways
- • Bank of America is reportedly set to allow certain clients to trade bitcoin futures, per a Blockworks report citing CoinDesk, which said the bank will use CME Group's cash-settled contracts.
- • The CME Bitcoin futures contract is USD cash-settled and based on the CME CF Bitcoin Reference Rate (BRR), a once-a-day reference rate of the U.S. dollar price of bitcoin; the transactions do not involve holding bitcoin.
- • The move follows roughly a week after the bank planned to begin research coverage of cryptocurrencies and digital assets, according to an internal memo obtained by Blockworks.
- • The development comes after Goldman Sachs named Galaxy Digital liquidity provider for its bitcoin futures block trades on CME and announced a digital assets strategy the month before.
- • A Bank of America spokesperson declined to comment, and industry commentary suggests the bank will remain cautious rather than lead peers.
Summary
Bank of America is reportedly set to allow certain clients to trade bitcoin futures, a step that would extend the Charlotte, North Carolina-based bank's engagement with the crypto sector. According to CoinDesk, as cited by Blockworks, the bank will access bitcoin futures through CME Group. CME's Bitcoin futures contract is a USD cash-settled contract based on the CME CF Bitcoin Reference Rate (BRR), which serves as a once-a-day reference rate of the U.S. dollar price of bitcoin. The futures involved do not require transacting in bitcoin itself. A Bank of America spokesperson declined to comment.
The report arrives about a week after the bank planned to begin research coverage of cryptocurrencies and digital assets, according to an internal memo obtained by Blockworks. Candace Browning, the firm's global head of research, described the space in the note to colleagues as "one of the fastest-growing emerging technology ecosystems."
The move is also framed against competitive pressure from Goldman Sachs. Blockworks reported that Goldman last month named Galaxy Digital the liquidity provider for its bitcoin futures block trades through CME Group, and the month before had announced a digital assets strategy that includes offering bitcoin derivatives to clients and opening a dedicated cryptocurrency trading desk. David Tawil, president of ProChain Capital, told Blockworks that the move shows Bank of America trying to keep pace with Goldman.
Tawil does not expect Bank of America to lead among its peers, arguing that from the bank's perspective there is too much to lose and not yet enough to gain. He said he expects traditional Wall Street to pursue crypto benefits without diving in head-first, and that institutions are more likely to be pushed into the space than to take the initiative.
Blockworks also noted broader competitive views on digital wallets, citing Rosenblatt Securities analyst Sean Horgan, who believes digital wallets as a group will disrupt traditional banks over the next five to 10 years, and Mizuho Securities analyst Dan Dolev's July 15 note describing Square as potentially "the money center bank of the future."
The report arrives about a week after the bank planned to begin research coverage of cryptocurrencies and digital assets, according to an internal memo obtained by Blockworks. Candace Browning, the firm's global head of research, described the space in the note to colleagues as "one of the fastest-growing emerging technology ecosystems."
The move is also framed against competitive pressure from Goldman Sachs. Blockworks reported that Goldman last month named Galaxy Digital the liquidity provider for its bitcoin futures block trades through CME Group, and the month before had announced a digital assets strategy that includes offering bitcoin derivatives to clients and opening a dedicated cryptocurrency trading desk. David Tawil, president of ProChain Capital, told Blockworks that the move shows Bank of America trying to keep pace with Goldman.
Tawil does not expect Bank of America to lead among its peers, arguing that from the bank's perspective there is too much to lose and not yet enough to gain. He said he expects traditional Wall Street to pursue crypto benefits without diving in head-first, and that institutions are more likely to be pushed into the space than to take the initiative.
Blockworks also noted broader competitive views on digital wallets, citing Rosenblatt Securities analyst Sean Horgan, who believes digital wallets as a group will disrupt traditional banks over the next five to 10 years, and Mizuho Securities analyst Dan Dolev's July 15 note describing Square as potentially "the money center bank of the future."
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