Trading On margin

FTX publishes key principles for the regulation of the crypto-trading platform market

NASSAU, Bahamas, Dec 3 2021 / PRNewswire / – FTX (“the Company”), one of the world’s leading cryptocurrency exchanges, today released a paper titled, Key FTX principles for regulating the crypto-trading platform market. The set of 10 principles details a regulatory environment that, if adopted, will enable policymakers to effectively regulate the digital asset ecosystem while maximizing the potential for growth and innovation. These principles will be part of Sam Bankman-Fried’s written commentary to accompany his in-person testimony to the House Committee on Financial Services during his hearing on Wednesday, December 8, 2021, titled: “Digital Assets and the Future of Finance: Understanding the Challenges and Benefits of Financial Innovation in United States“.

CEO and co-founder of FTX Sam Bankman-Fried commented, “We see these principles as a framework for conversation – both in the United States and in jurisdictions where regulatory guidance could be clearer. We want to engage in an open dialogue with regulators and help establish a set of rules to level the playing field for everyone in our industry and to allow innovation in our space to continue to thrive. These principles were created with the protection of investors and the public as a top priority. We hope we can work with regulators in the United States and ultimately around the world to implement reasonable regulatory frameworks.

Below is a summary of the principles and the full document can be viewed at https://blog.ftx.com/policy/:

The FTX principles and proposals on market regulation contain several key points. First, when considering a framework for oversight of the spot and derivatives cryptocurrency markets, policymakers should take a principled approach and take advantage of existing policy objectives that apply to the capital and derivatives markets. traditional. These objectives include: ensuring the protection of customers and investors, promoting market integrity, preventing financial crimes, and ensuring the overall security and soundness of the system. If regulations are created to support these goals, they will apply equally to all markets where crypto assets are traded.

Second, FTX and other crypto platforms have brought significant innovations to trading, and a strong framework should preserve those innovations. Indeed, they minimize risk, promote the efficiency of capital and protect investors, all to better serve the public. Some of the key innovations include: automated risk management systems that ensure that client accounts trading multiple different assets do not turn net negative on all client positions; 24/7 trading hours, which also reduces risk; allow a non-intermediated market structure that gives all investors the same equal access to the market and helps to minimize conflicts of interest; and open market data that aligns the interests of the platform operator with those of the investor.

Third, a useful framework would allow crypto platforms to offer both spot transactions and derivatives on crypto assets under a unified system, with a rulebook and a technology platform to manage the risks associated with it. all trading activity in accounts receivable. In jurisdictions with mature markets like the United States, regulatory frameworks have been developed in response to fragmented markets for securities, commodities and derivatives on these assets. FTX has demonstrated that bringing together the markets for assets and the derivatives of these assets offers key benefits to market participants. These benefits come from a rulebook that applies to all transactions, a guarantee and risk margin program, and a single technology stack for the front end (user interface) and back. end (settlement and risk management positions). Public policy should allow this rulebook model because of its risk reduction and client protection attributes. To do this, and where there is more than one market regulator, such as in the United States, regulators must cooperate and use their authorities, where appropriate, to adapt to this model for crypto assets. At the same time, lawmakers could fill in the remaining loopholes that cannot be adequately addressed with existing authority.

One of these shortcomings is the proper treatment and disclosures for certain types of crypto assets offered for trading, including those whose function and purpose may change over time. Although some of these tokens are securities, the classification of others is not clear in existing definitions, and therefore it may be appropriate to establish further definition refinements as well as a different disclosure framework for some assets. Fourth, an appropriate policy framework for regulating the crypto asset market should remain neutral to the structure of the market and expressly allow unmediated markets. It could also take a functional approach and require disclosed policies and procedures created by the platform operator to address key issues such as custody of assets, key platform lifecycle functionality. of a transaction, reporting market activity to supervisors, providing market data to platform users, ensuring adequate financial resources, ensuring that stable coins used on the platform are subject to adequate standards and protecting against cyber attacks and financial crimes.

About FTX

FTX.COM is a cryptocurrency exchange built by traders, for traders. It offers innovative products, including derivatives, options and advanced volatility products, tokenized stocks, prediction markets, leveraged tokens and an OTC desk. FTX.COM strives to be an intuitive yet powerful platform for all kinds of users, and to be the most innovative exchange in the industry. FTX.COM has grown rapidly since its founding, becoming one of the world’s most respected cryptocurrency exchanges in less than 2 years.

To learn more about FTX.COM, please visit: https://ftx.com/

FTX.COM is not available to residents of the United States or residents of other prohibited jurisdictions, as stated in its Terms of Service.

Media contact
Jay morakis
Group M Strategic Communications (on behalf of FTX)
+1 646 859 5951
[email protected]

SOURCE FTX International


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