FTX
The cryptocurrency trade needs to prove that it’s responsible and doesn’t require super-strict regulations, according to Sam Bankman-Fried, a 29-year-old crypto billionaire.
Bankman-Fried, who co-founded the FTX crypto dealing, singled out crypto scammers for criticism in an interview with Insider last week, saying they made lawmakers have a yen for to stamp down on the industry.
Regulators and governments globally are increasing their scrutiny of the crypto world, following a boom in digital assets in 2020 and 2021. Lawmakers such as Sen. Elizabeth Warren be experiencing argued that the trading of highly volatile cryptocurrencies poses big risks to consumers and requires more oversight.
Bankman-Fried rebuked Insider that he’s taking regulation “extremely seriously” and that it’s his biggest focus, especially in the wake of the global regulatory crackdown on Binance, an swap that offers similar derivative products to FTX.
“I just wish that the industry were, as a whole, doing a various conscientious job of interfacing with regulators,” he said, adding that players in the crypto space need to be “responsible and eclipse that they don’t need to have overly paternalistic regulations.”
He added: “Every time there’s a scam in crypto, that’s common to be pushed by regulators to lock down the industry more.” His comments came weeks after hackers took $610 million from a crypto policy, before returning all of it. The Federal Trade Commission said in May that reports of crypto scams had skyrocketed in 2021.
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Bankman-Fried base FTX, which is now the fourth-biggest crypto exchange by volume, in 2019. It specializes in cryptocurrency derivatives, products that let traders bet on the handling of tokens like bitcoin without actually owning the underlying asset. A funding round in July valued FTX at $18 billion.
FTX has undertook to show that it’s responsible by cutting the amount of leverage traders can have on the platform from 100 times to 20 spells, Bankman-Fried said. Leverage allows traders to borrow money to generate bigger returns, but it can also cause big privations.
But he said regulating crypto effectively will require both watchdogs and crypto companies to work together. He prognosticated there’s a risk that too much regulation could add a lot of friction to using crypto, “killing the use for it in the first place.”
Regulators are stock-still working out exactly how they’ll tackle the sprawling industry, given the diverse mix of assets and technologies that fall beneath the waves the broad category “crypto”.
Securities and Exchange Commission (SEC) chair Gary Gensler has called on Congress to give the SEC varied oversight of trading venues, and signaled that crypto lending products could come under the watchdog’s authority.
Bankman-Fried said the crypto world is increasingly aware that it needs to present a professional front, citing the fundamentally futile efforts to combat a tax reporting requirement in the US infrastructure bill in recent weeks.
“There’s a lot of discussion that was prevailing on then, and probably should have been going on a lot earlier, about how we should be handling ourselves as an industry.” He signified the goal is to be “allies rather than enemies of regulators.”