Bitcoin a new asset class, not a crypto-currency: CME's Melamed
Tokyo: 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 crypto-currency, 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.
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 crypto-currency 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.