FTX’s lengthy engagement with regulators to secure licences to operate across the globe should give the crypto exchange an edge over its competition in the coming years, despite a short-term drain on resources including billions of dollars in expenditure, the company’s founder and chief executive has said.
“We are now regulated in dozens of jurisdictions,” Sam Bankman-Fried told the International Swaps and Derivatives Association's annual general meeting in Madrid on Wednesday, listing a string of countries where FTX is now licensed to operate including the US, the EU and Japan.
In the short term that’s “taken a ton of our time and attention, not to mention one or two billion dollars,” he said, acknowledging that has meant fewer resources focused on expanding the company's infrastructure, marketing and product development.
“There’s definitely been a disadvantage there. On the flip side, we are now certainly the most licensed crypto exchange globally by far,” Bankman-Fried said. “It has put us in a position to be able to operate legally in a licensed manner all over the world and to be able to interface with institutions that are going to require [that]."
FTX is one of the largest crypto-currency exchanges and its billionaire founder has become one of the most prominent voices in the crypto community. Earlier this year, the Financial Times reported that Goldman Sachs chief executive David Solomon had sought to woo the 30-year-old Bankman-Fried with the offer of advisory services including on engagement with the CFTC.
That comes amid a broader rapprochement between traditional finance and the crypto world over the past year or so. Investment banks have cautiously looked to increase their presence in crypto markets in light of growing interest from institutional clients, while many crypto firms have tapped banking veterans to help build their operations.
Crypto's shift towards mainstream finance was on full view at ISDA's AGM, with the topic regularly cropping up in comments from regulators and industry executives.
FTX recently became an ISDA member, while the trade body is in the process of developing contractual standards for crypto derivatives to help foster growth in these markets.
“It is super-important to have some amount of uniformity here,” said Bankman-Fried. “It’s just a huge pain to interface in this space if every single contract has completely [different] definitions that don’t look anything like each other.”
Bankman-Fried also commented on a recent consultation the Commodity Futures Trading Commission initiated following a request from FTX to amend derivatives clearing rules that would allow participants to access clearing directly without going through a clearing broker.
The proposal would mean "intermediation is not mandatory. What that means is anyone can access the platform directly," said Bankman-Fried. "That's something that I feel is really, really important. In order to achieve equitable access for our markets we have to have it be the case that the smallest players get the same power as the largest ones."