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Merrill Lynch Bars Clients, FAs from Bitcoin Fund Trading

January 4, 2018

Merrill Lynch has banned its financial advisors and clients from trading in Bitcoin, the Wall Street Journal reports.

Advisors will no longer be allowed to pitch investments tied to the cryptocurrency nor execute requests from clients to trade in the over-the-counter Grayscale Investment Trust Bitcoin fund, a person familiar with the matter tells the Journal.

The wirehouse cited “concerns pertaining to suitability and eligibility standards” of the fund in an internal memo seen by the paper. The policy has been in place since Dec. 8, prior to the launch of Bitcoin futures, according to the person, the Journal writes.

A Merrill Lynch spokeswoman confirms the decision to the paper. The ban applies firmwide and covers self-directed accounts, the Journal writes. Merrill Lynch will allow existing positions in the Grayscale fund only in brokerage accounts but not in fee-based accounts, the source tells the paper.

Some advisors at the wirehouse tell the Journal that the ban will prevent them from satisfying their clients’ demand about Bitcoin investing. Others tell the paper Merrill Lynch made the right decision, calling cryptocurrencies too risky.

The firm isn’t alone among large brokerages to bar trading in Bitcoin, which reached a value of close to $20,000 in December and was trading around $15,000 yesterday, the Journal writes. UBS Group also already prohibits its reps from trading products tied to Bitcoin, a person familiar with the policy tells the paper.


UBS’s chief investment officer Mark Haefele said recently Bitcoin carries risks that other currencies don’t and hasn’t reached critical mass. And JPMorgan, Citigroup and Royal Bank of Canada told their clients they wouldn’t be able to trade in the Bitcoin futures market launched Dec. 10, according to the Journal. JPMorgan Chase CEO Jamie Dimon has recently called Bitcoin “a fraud.” But some retail brokers, including TD Ameritrade and Ally Financial, have said they would support Bitcoin futures trading.

By Alex Padalka
  • To read the Wall Street Journal article cited in this story, click here.