Well you can count Thomas Peterffy, the billionaire founder and chairman of Interactive Brokers, among those who think Bitcoin futures are an absolutely terrible idea.
And Peterffy is a man who knows a thing or two about terrible ideas that are potentially dangerous, because after all, he’s “the father of high frequency trading.”
Over the years, Peterffy has variously suggested that HFTs serve to suck liquidity out of the system just when it’s needed most (a contention that of course flies in the fact of the notion that the machines are liquidity providers) and has also argued (correctly) that at a certain point, extra speed creates no economic value whatsoever.
Given that, it probably shouldn’t surprise you that he has now written an open letter to Christopher Giancarlo essentially warning the CFTC chairman to keep the crypto craziness away from everything else or risk accidentally triggering a meltdown.
“This letter is to request [the CFTC] require any clearing organization that wishes to clear any cryptocurrency or derivative do so in a separate clearing system isolated from other products,” Peterffy wrote, before cautioning that “if the Chicago Mercantile Exchange or any other clearing organization clears a cryptocurrency together with other products, then a large cryptocurrency price move that destabilizes members that clear cryptocurrencies will destabilize the clearing organization itself and its ability to satisfy its fundamental obligation to pay the winners and collect from the losers on the other products in the same clearing pool.”
In other words, he thinks these need to be quarantined. You can read the entire letter below.
Peterffy showed up on CNBC’s “Fast Money” on Wednesday to talk a bit more about this rather pressing matter.
“I think bitcoin and other cryptocurrencies are great ideas. They should be allowed to be traded freely and used freely to find their appropriate role in the economy,” Peterffy said, before clarifying his stance as follows:
What I am objecting to is linking bitcoin and other cryptocurrencies by federal regulations to the real economy, which would happen if we were to clear bitcoin along with other products in the same trading house.
Here’s the video:
So just to be clear, Peterffy is arguing that this absolutely has to be kept separate or else “it could bring down the entire economy.” Note that he also said not keeping this separate would be “suicidal.”
Now let’s see how this gets spun by a crypto crowd who doesn’t understand the implications and perhaps more amusingly, let’s see how it gets spun by folks who like Peterffy but also love Bitcoin.
Finally, here’s Peterffy’s full letter: