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Bitcoin a new asset class, not a cryptocurrency – CME’s Melamed

Bitcoin futures will help tame digital currency into a regular type instrument of trade with rules, chairman says.

Bitcoin is likely to become a new asset class in its own right, such as gold or stocks, which can be traded by major investors and regulated, not simply a cryptocurrency, Leo Melamed, chairman emeritus of CME Group, said on Tuesday.

CME, the world’s largest derivatives exchange, last week announced that it would launch the futures contract of bitcoin, marking a major step in the digital currency’s path toward mainstream acceptance.

Melamed said he expects major investors to take part in bitcoin futures, which the exchange plans to start by the end of year.

“That’s a very important step for bitcoin’s history… We will regulate, make bitcoin not wild, nor wilder. We’ll tame it into a regular type instrument of trade with rules,” Melamed told Reuters in an interview.

The futures will allow investors to short-sell bitcoins, making two-way bets possible, a development that he expects will attract major institutional investors, not just speculators. 

Six-fold gains in the bitcoin price so far this year have stirred a debate among financial professionals on whether the digital currency represents a revolution in financial technology or just another tech bubble.

Read: Bitcoin: what’s coming in the year ahead

Jamie Dimon, chief executive of JPMorgan Chase & Co said in September that bitcoin “is a fraud” and will blow up while regulators in many countries tightened their grip on its trading.

Melamed, 85, said while he was initially sceptical about bitcoin he sees similarities between it and International Monetary Market currency futures trading, which he launched as chairman of the Chicago exchange in 1972.

“The world in the 1970s didn’t look at currency trading as a valid instrument of finance. I too went from not believing (in bitcoin) to wanting to know more,” he said.

He says bitcoin could go beyond being a cryptocurrency and represent a new asset class based on blockchain technology.

Pundits say blockchain will enable the transfer of assets without a centralised system such as banks and sharply reduce costs of money transfer.

“My whole life is built abound new technology. I never said no to technology. People who say no to technology are soon dead. I’m still that same guy who believes in, at least examining change. That’s what bitcoin represents,” he also said.

Melamed was elected chairman of the Chicago Mercantile Exchange in 1969. He moved to Chicago in his youth, having fled Nazi-occupied Poland with his family.

Melamed’s parents were among a small number of Jews to flee to Lithuania after Germany invaded their native town of Bialystok in Poland, he said.

There, his family obtained visas to Japan, thanks to a diplomat, Chiune Sugihara, who helped resettle thousands of refugees despite Tokyo’s policies at the time.

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CME will not be futures it will merely be a Binary Option Scam where you bet on price going up or down. That can not be approved and will never fly. If it is a future CME must hold the asset in escrow on BTC wallet like grain futures the asset must exist and contracted with the farmer. There are only 16.5Mil in circulation so just by selling 100mil in futures will be a scam and irregular. So for me to buy a contract, while the contract runs the asset/commodity must be secured in a BTC wallet till the end of the contract. No person in his right mind will send his BTC to a wallet that is not transparent on the block chain or buy a contract where the grain, cattle or commodity does not exist. I smell a fish and the fact that CME mentioned that they do not see problem with approval because they approve these things themselves makes me think of 911. The exchange they working with is registered outside of NY and USA in a haven where many illegal Binary Option Companies operate from. This will hurt BTC in arbitrage trading between CME and Crypto Exchanges, think the FED is involved.

You make some very interesting points about that. I wonder how such points may be addressed.

End of comments.

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