Sam Bankman-Fried, CEO of the crypto derivatives exchange FTX, has argued that derivatives are critical to the efficiency of digital asset markets.
In an interview with Forbes posted on Monday, Crypto Billionaire Claimed Crypto Derivatives Are “Misunderstood”on the grounds that critics do not recognize their vital role in increasing the liquidity and efficiency of the markets.
Derivatives refer to financial contracts that derive their value from an underlying asset or benchmark index.. Crypto derivatives in the form of perpetual futures, options and swaps have grown in popularity in recent years.
Bankman-Fried described the derivatives as “misunderstood” and added:
“People will notice that derivatives move more volume in crypto than Spot, which is true. But that applies to all asset classes in the world. “
In addition to promoting the efficiency and liquidity of derivatives, Bankman-Fried noted that such products can offer greater flexibility to investors seeking exposure to crypto assets. by enabling them to access markets without facing the challenges of digital asset custody.
Nevertheless, realized the risks associated with traders using excessive leveragewhich can lead to higher volatility and expose investors to liquidations. In March, Cointelegraph reported that extreme leverage resulted in the liquidation of $ 500 million worth of Bitcoin in just an hour.
End of July, Bankman-Fried reduced the leverage available to traders on its FTX exchange from 101x to 20x. At the time, he claimed the measure was intended to “Promote Responsible Commerce”. Speaking to Forbes, Bankman-Fried explained his decision to reduce the leverage available to FTX users:
“Any position taken with this leverage may not be absolutely critical to efficient markets, and I don’t find that particularly important or good for the health of the cryptocurrency market.”
Bankman-Fried also encouraged the broader crypto industry to adopt the regulationcalling on digital asset companies to “do a more thorough job of interacting with regulators”.
Earlier this month, the FTX leader estimated that it would take three to five years to get regulatory clarity for the cryptocurrency industry. “I spend five hours a day doing everything from regulation to licensing and everything in between.”, called.
August 9th FTX has announced that it will optimize its Know Your Customer process by checking the phone numbers with the registered data to confirm the jurisdictions of the users.