Aaron Brown, Columnist

CME's Bitcoin Foray Has Three Plausible Outcomes

Cryptocurrencies are valued at $182 billion, but probably only a couple of billion dollars of that is actual investment.

November 1, 2017 at 12:00 PM EDT

By Aaron Brown

Aaron Brown is a former head of financial market research at AQR Capital Management. He is also an active crypto investor, and has venture capital investments and advisory ties with crypto firms.

Bitcoin is booming.
Photographer: Dan Kitwood/Getty Images

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CME Group announced plans to offer a bitcoin futures contract this year. This brings it in line with Cboe Global Markets, which announced similar plans in August, and LedgerX, which began trading in bitcoin options and day-ahead swaps two weeks ago. These contracts are important steps toward integrating bitcoin with the global financial system. I see three plausible scenarios, though only one leads to bitcoin becoming more mainstream.

All three exchanges are regulated by the Commodity Futures Trading Commission, which appears willing to treat bitcoin as a commodity such as wheat and oil. The Securities and Exchange Commission has been less accommodating, and without a friendlier SEC, institutions will be reluctant to offer bitcoin-related retail products or to include bitcoin in institutional portfolios like pension funds.1509542587393 (Full disclosure: I own bitcoins and other cryptocurrencies.)

Before it’s here, it’s on the Bloomberg Terminal

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