“I think the ban is very prudent on Merrill Lynch’s part,” said Anthea Perkinson, founder of Monterey Associates, Pelham, N.Y.
“This is more speculation than investment and there is no way to do proper research or gauge the risk. It’s very interesting to read about cryptocurrencies and it has all the appeal of Powerball but it does not seem to be a great investment for clients,” said Perkinson, who is chairman of the Board of the FPA of New York.
“That said, I have one client who is dabbling in it,” added Perkinson. “He knows I’m on record saying that it’s going to end in tears, but he just finds it fascinating and loves the rush. We’ll see how it goes,” the veteran RIA said.
Merrill is the latest wirehouse to ban Bitcoin. The list of other firms that have banned Bitcoin futures trading include Citigroup, JP Morgan, Raymond James, UBS Group and Royal Bank of Canada.
JP Morgan CEO Jamie Dimon called Bitcoin a fraud in October: "If you're stupid enough to buy it, you'll pay the price for it one day," Dimon said at an investor conference last year, while admitting that his daughter had bought Bitcoin “and now she thinks she’s a genius.”
SEC Chairman Jay Clayton and Commissioners Kara M Stein and Michael S. Piwowar warned investors Thursday that losses in the cryptocurrency marketplace—even those due to fraud -- may be unrecoverable.
“The SEC and state securities regulators are pursuing violations, but we again caution you that, if you lose money, there is a substantial risk that our efforts will not result in a recovery of your investment,” the SEC officials said in a joint statement.
On Thursday, the North American Securities Administrators Association (NASAA) issued the second of two investor warnings about cryptocurrencies in a month.
“The recent wild price fluctuations and speculation in cryptocurrency-related investments can easily tempt unsuspecting investors to rush into an investment they may not fully understand,” NASAA President Joseph P. Borg said.
“Cryptocurrencies and investments tied to them are high-risk products with an unproven track record and high price volatility. Combined with a high risk of fraud, investing in cryptocurrencies is not for the faint of heart,” Borg added.