Wells Fargo & Company (WFC), the national bank that runs the WellsTrade online brokerage service, is joining Merrill Lynch in prohibiting its brokers from selling Grayscale's Bitcoin Investment Trust Fund.
According to a report in WealthManagement.com, citing a person familiar with the matter, Wells Fargo is not letting advisors trade the bitcoin fund or pitch bitcoin futures to customers. The policy also applies to advisors who are part of Wells Fargo's Advisors Financial Network. What's more, the report noted that there are no current plans by Wells Fargo Advisors or Wells Fargo Securities to create a trading desk for cryptocurrencies, which is something the report noted had been rumored.
The move on the part of Wells Fargo to prohibit trading of the bitcoin fund and bitcoin futures comes as Merrill Lynch is also banning these investments. Citing a memo, Reuters reported that, as of Dec. 8, Merrill Lynch stopped signing off on new orders for the Bitcoin Investment Trust, citing "suitability and eligibility standards of this product." The memo was reportedly sent to around 17,000 brokers at Merrill Lynch and Merrill Edge. The Bitcoin Investment Trust Fund is run by Barry Silbert, a former Wall Street investment banker and a big supporter of cryptocurrencies. "We look forward to speaking with Merrill Lynch and addressing any questions or concerns they have about the Bitcoin Investment Trust," Silbert told Reuters in an email.
Merrill Lynch and Wells Fargo aren't the only ones with online brokerage businesses that are taking a cautious approach to offering clients the ability to invest in bitcoin. TD Ameritrade, TradeStation and E*TRADE are the only three of the major discount brokerages to offer customers access to bitcoin futures from CME Group and Cboe World Markets. Charles Schwab told Investopedia that it is taking a wait-and-see approach, while Fidelity Investments has said that it has no plans to offer the futures products to its brokerage clients. Ally Invest had originally said that it would offer bitcoin futures, but after the volatility in the first week of trading, the firm has opted to do more research before wading in.
While bitcoin and cryptocurrencies garnered a lot of investor attention in 2017, driving the price of bitcoin up from $1,000 to its current price of around $14,800, it is not without controversy. Cryptocurrency is volatile and unregulated, prompting big names on Wall Street and regulators around the globe to warn about the risks in investing in digital currency. JPMorgan Chief Executive Jamie Dimon famously called bitcoin a "fraud" and warned that he would fire any traders engaged in trading the cryptocurrency.