Sam Bankman-Fried, chief executive of crypto exchange FTX, said he is surprisingly optimistic on a US regulatory framework for digital assets and he expects a bill to be in place in a year.
He spoke to Anthony Scaramucci, founder and managing partner at hedge fund SkyBridge, at the SALT New York conference.
Bankman-Fried said he has been going to Washington D.C. every two or three weeks for the last year to work on building a regulatory framework for digital assets. The biggest issues he has been discussing with lawmakers are customer protections and how to bring volume and liquidity onshore to provide clarity for the industry.
“There has to be reasonable Federal oversight of the industry and an agency, or multiple agencies, that are in charge of policing the space,” he added. “Regulatory infrastructure is the biggest piece of this and the SEC and CFTC are two natural agencies to have a role.”
FTX has been applying to both agencies for US cryptocurrency licences and is optimistic they will be granted. Bankman-Fried believes that in one year’s time there will be a bill or a framework for digital assets in the US, which he did not previously think was a real possibility.
“We want oversight and to be regulated,” he said. “Regulatory clarity is going to be huge and unlock the asset class for a number of institutions that have been looking for a way to get in, but have been confused and nervous.”
In addition, regulatory clarity will allow the industry to use blockchain to build market structure outside crypto across different asset classes.
For example, in US equities a transaction has to go through six or seven entities to transfer from the buyer to the seller but blockchain would allow peer-to-peer transfers. Technology is already available to allow this to happen according to Bankman-Fried but the biggest piece is working out the right regulatory structure.
“In theory there is a huge advantage to using blockchain rails to settle stock transactions,” he said. “The industry could move from T+2 days to T+2 seconds so you don’t have settlement risk hanging over that entire time.”
FTX has built out this market structure internationally but has been discussing how to do this in the US.
“I have been pleasantly surprised by the extent to which a lot of people in Washington D.C. are trying to figure out how they can do the right thing but it’s a really tough environment,” added Bankman-Fried. “I think there is a lot of hope to get great things done even if it is also a lot of work.”
FTX Ventures and SkyBridge
FTX Ventures, the venture capital arm of the group, said on 9 September that it will invest in SkyBridge and provide additional working capital to fund growth initiatives and new product launches. SkyBridge will use a portion of the proceeds to purchase $40m in cryptocurrencies to hold on its corporate balance sheet as a long-term investment.
The firms will expand their collaboration on venture and digital asset investing across current and future product offerings.
Scaramucci said in a statement that Skybridge will remain a diversified asset management firm, while investing heavily in blockchain.
“We look forward to collaborating closely with SkyBridge on its crypto investment activity and also working alongside them on promising non-crypto-related investments,” added Bankman-Fried.
