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The Wall Street Journal was the first to disclose on Wednesday that cryptocurrency exchange FTX was seeking the Commodity Futures Trading Commission’s (CFTC) license to let private investors to utilize derivatives to make leveraged bets on bitcoin.
What investors can do?
If allowed, investors would be able to transact with Sam Bankman-bitcoin Fried’s exchange directly rather than through a broker, which may fundamentally alter the infrastructure and operation of the derivatives markets.
At a US Congressional hearing in May, Terrence Duffy, CEO of the Chicago Mercantile Exchange (CME), stated that the action would increase “market risk.”
A bitcoin derivative product is available from the CME that is intended to rival FTX’s selection.
Concerns about consumer protection were raised in responses to the CFTC’s call for public comments in March about FTX’s proposal for an upgraded derivatives clearing company registration.
The plan from FTX has drawn criticism from both rival companies and Wall Street businesses.
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Better Markets co-founder, president, and CEO Dennis Kelleher stated in a letter that the CFTC must make sure that “the safety of clients and market participants — and minimizing if not lowering systemic risks — remain the foremost considerations” throughout the examination.
Chris Bae, the CEO of the digital asset trading company Enhanced Digital Group, told Blockworks that as the cryptocurrency market develops, it is “inevitable” that more complex trading techniques, including the usage of derivatives, would appear.
“It is only logical that the retail sector would follow,” he added. “We have seen institutional demand for structured products and derivatives being utilized to better manage the present market cycle.”
In reference to his company’s rescue of crypto lenders BlockFi and Voyager, Bankman-Fried remarked in an interview event at the Harvard Business School Club of New York last Thursday that “retail investors’ money put on these platforms should clearly be senior to stock holders by new or old.”
Steve Anderson is an Australian crypto enthusiast. He is a specialist in management and trading for over 5 years. Steve has worked as a crypto trader, he loves learning about decentralisation, understanding the true potential of the blockchain.
