- FTX CEO Sam Bankman-Fried defended the derivatives market in an interview with Forbes on Monday.
- The 29-year-old crypto billionaire defined that derivatives make markets extra environment friendly by including liquidity for merchants.
- He additionally reiterated his reasoning for decreasing leverage limits on FTX in July.
- Sign up here for our daily newsletter, 10 Things Before the Opening Bell.
FTX CEO Sam Bankman-Fried defended the derivatives market and defined his rationale for slashing leverage on his crypto trade in an interview with Forbes on Monday.
Crypto derivatives are a “considerably misunderstood space,” Bankman-Fried instructed Forbes. “Folks will word that derivatives commerce extra quantity in crypto than spot, which is true. However that’s true of each asset class on the planet.”
The 29-year-old crypto billionaire defined that derivatives make markets extra environment friendly by including liquidity for merchants who need crypto value publicity, however who do not want precise token supply.
Bankman-Fried conceded that derivatives like crypto futures do generally go fallacious – equivalent to when leveraged positions lead to forced liquidations. However these kinds of eventualities are over-emphasized and are typically much less essential than the broader helpful results of gaining access to futures.
He additionally reiterated his reasoning for lowering leverage limits on FTX in July, a transfer that was mirrored by trade competitor Binance.
“We didn’t have this on day one and it was probably the most requested characteristic from our customers. They have been refusing to make use of the platform until we had it,” Bankman-Fried stated.
However as issues started to mount concerning the fragility of maximum leverage – generally multiplying trades by an element of 100 – FTX walked again its excessive leverage limits, decreasing the cap to twenty occasions.
“Any place that you simply’re placing on with that stage of leverage cannot be completely essential for environment friendly markets, and this isn’t one thing I felt was notably essential or good for crypto market well being,” defined Bankman-Fried.
In his Forbes interview, the FTX CEO emphasised the necessity for crypto to embrace regulation, a sentiment he additionally expressed in a current interview with Insider.
“I simply want that the trade have been, as an entire, doing a extra conscientious job of interfacing with regulators,” he instructed Insider.