E*TRADE has jumped into the bitcoin craze, announcing Wednesday that it will offer bitcoin futures from Cboe Global Markets. The move makes E*TRADE Financial Corporation (ETFC) the third major online brokerage to offer its clients the ability to trade bitcoin futures.
TradeStation has been offering bitcoin futures from the Cboe and CME Group Inc. (CME) from day one, while TD Ameritrade announced this week that it was offering CME bitcoin futures to its clients. Ally Invest had signaled early on that it would provide customers with access to CME bitcoin futures but has since opted to conduct further research before making a move. Charles Schwab is taking a wait-and-see approach, while Fidelity Investments has said that it does not have any plans to offer bitcoin futures in its brokerage accounts. In a statement to Bloomberg, E*TRADE said that Cboe futures are now available on its platform. It is not clear if the discount brokerage will offer the CME bitcoin futures as well.
The move on the part of the New York-based online brokerage comes as there is intense interest in bitcoin and other cryptocurrencies – and not just among savvy investors. With the price of bitcoin surging all year, regular investors have been expressing interest in digital currency. The launch of bitcoin futures by CME and Cboe served to create more legitimacy for a market that is unregulated and is prone to wild swings in prices.
The risk associated with bitcoin trading has resulted in regulators around the world warning that investors face the real chance of losing all their money. Despite the potential for big-time losses, a handful of online brokerages are responding to the demand they are seeing from customers by offering the bitcoin futures. TradeStation is taking it even further, with President John Bartleman saying that the company is looking at ways to let customers trade bitcoin directly. He said in a recent interview that TradeStation could make this happen either via a partnership with existing exchanges or by becoming an exchange itself.
While the jury is still out about how the bitcoin futures will fare, the discount brokerages that do offer the products stand to be winners either way. According to Morgan Stanley, one of the big benefits of offering DIY investors access to new cryptocurrency products is the potential to cross-sell. An important practice on Wall Street, cross-selling happens when a trading firm lands a new client for one service and then gets the client into other products at the brokerage firm. Furthermore, Morgan Stanley said that offering the new products could build brand awareness among regular investors given the attention that bitcoin and the bitcoin futures are receiving in the marketplace and from the mainstream media.