Expert: Bitcoin futures do not promise legitimacy of the currency

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Trading kicked off for new Bitcoin futures contract on Sunday at the Chicago Mercantile Exchange (CME), the world's largest derivatives exchange operator. The launch of Bitcoin futures is viewed as a major step in the digital currency's path towards legitimacy, as the entry barriers would be lowered for big institutional investors.

While Bitcoin futures debut seems to give the cryptocurrency a stronger endorsement, Professor John Gong from the University of International Business and Economics said that such debut cannot mean a step towards “legitimacy,” indicating that the fundamental issue for decentralized currencies such as Bitcoin is lack of regulation.

“The debut on CME makes no difference for me. The fundamental economic foundation is not there. And the fundamental question is that it has to be regulated by one government or an alliance of governments,” said Gong, adding that it’s time for leading countries to come together and seriously think about what to do in face of the speculative frenzy.

The CME-listed Bitcoin front-month futures opened at 20,650 US dollars and have so far traded as low as 19,290 US dollars. The January contract is still trading around that low level, below the reference price set by the exchange. The week-old Bitcoin futures contract at the Chicago Board Options Exchange (CBOE) was last trading at 19,280 dollars, up 6.5 percent on the day.

The overheated Bitcoin market is also criticized by those in finance. In September, JPMorgan Chase (JPM) Chairman and CEO Jamie Dimon called Bitcoin a "fraud" and said that he would fire anyone who bet on Bitcoin for their stupidity.

“The currency isn’t going to work. You can’t have a business where people can invent a currency out of thin air and think that people who are buying it are really smart,” Dimon said at a bank investor conference in New York in October.

And United Bank of Switzerland (UBS) Chairman Axel Weber also stated recently that it has no plans to trade Bitcoin.

“For me it’s not a currency, for me it is an investment and it is an investment that has no intrinsic value—it’s a transaction device and people have to be cautious if they look at it as a store of value or as an investment that has long-lasting value,” said Weber.