FTX Chaos Fails to Deter Futures Exchanges from Trading Crypto
CME Group Inc. Chief Executive Officer Terry Duffy, one of Bankman-harshest Fried’s opponents, has stated that he will not discontinue crypto-futures trading because of “one bad actor.” Following the FTX catastrophe, Cboe Global Markets, another Chicago exchange, and software vendor Trading Technologies both recommitted to digital assets.
Before the crash, executives at futures exchanges expressed worries about FTX‘s business model. The failure of the exchange might result in billions of dollars in losses for millions of account holders, as well as inquiries into charges of fraud. It has also ensnared Genesis, one of the largest lenders in the crypto business, as well as Gemini, which has delayed redemptions, and BlockFi, which was previously bailed out by the exchange.
“These occurrences validate our plan,” said Chris Isaacson, chief operating officer and chair of Cboe’s digital board, in a Friday interview. “If ever there was a time when trust in markets needed to be developed and strengthened in digital assets, it is now.” That is exactly what we intend to do.”
Cboe will continue to trade crypto-futures, according to Isaacson. Trading Technologies’ executive vice president of product management, Jason Shaffer, said his company will maintain the course as well, adding that consumers want to trade crypto in the same manner they trade conventional currencies.
Attendees at a Futures Industry Association gathering this week compared FTX’s demise to that of energy trader Enron Corp., which went bankrupt in 2001 and became a symbol of corporate deception. Christy Goldsmith Romero of the Commodity Futures Trading Commission even drew comparisons to the global financial crisis.
“Opaque, complicated, leveraged, unregulated goods, highly interconnected market, concerns about underlying asset quality, significant potential for contagion risk,” she explained. “These are the kinds of things that existed in 2008, and I see parallels with them now.”
Bankman-Fried was a key figure in an unsuccessful campaign to break into traditional finance. He recommended handling every step of a cryptocurrency derivative transaction, including clearing trades and eliminating the middlemen who, in many situations, assist spread risk. If approved by the CFTC, the scheme might have increased risks for the traditional industry and undermined long-standing business models like as CMEs.
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