Bank of America’s Merrill Lynch Puts a Ban On Investing In Bitcoin Related Products
With Bitcoin’s tremendously growing popularity in 2017, many big companies started developing financial instruments related to Bitcoin. We saw popular U.S.-based exchanges like the CME Group and CBOE group launching cash-settled Bitcoin futures contracts in the markets. Many more products like the exchange-traded funds and others are scheduled to arrive ahead this year.
But, in what might come as some sort of disappointment, Merrill Lynch - the brokerage arm of Bank of America has completely banned its clients and advisers from trading in Bitcoin-related investments.
According to the internal memo which is reviewed by The Wall Street Journal “The decision to close GBTC (Grayscale’s bitcoin investment trust) to new purchases is driven by concerns pertaining to suitability and eligibility standards of this product.” A WSJ source further claims that the policy was put by Merrill Lynch on Dec. 8, just two days before CBOE announced its Bitcoin Futures Contracts.
The recently put ban will prevent nearly 17000 advisers from pitching and Bitcoin-related investment products to its clients. In addition to the this, Merrill Lynch advisers are also banned from executing any client request to trade into Grayscale’s bitcoin investment trust (GBTC). However, the issued memo further states that client with existing position in Bitcoin and related investments can continue to hold them, but those having fees-based accounts should sell them.
The Bitcoin Investment Trust is currently run by Greyscale Investments and was found by popular cryptocurrency advocate and supporter - Barry Silbert. The fund is traded in over-the-counter market. It has been one of the most top performing funds with over 1500% returns in last 12 months against Bitcoin’s 1300% appreciation in the price.
In an email to Reuters, Silbert said “We look forward to speaking with Merrill Lynch and addressing any questions or concerns they have about the Bitcoin Investment Trust. We are unaware of any similar policies at other brokerage firms.”
Traditional Investments Firms from the Wall Street are still a lot hesitant to accept Bitcoin into the mainstream financial markets. Even before the launch of Bitcoin Futures Contracts last month, a few banks like the Citigroup, JP Morgan Chase, and Bank of America already prevented its clients from investing in Bitcoin instruments.
The Futures Industry Association (FIA) had published an open letter to the CFTC expressing concerns on the way in which Bitcoin futures were brought to the market, even before the contracts went live. However, CBOE’s chairman rejected this letter by calling it a “cheap shot” while company CEO Edward Tilly called it absolutely “uncalled for”.