Crypto Expert: Availability of derivatives has a crucial meaning

Brett Harrison, head of the US division of FTX, is concerned about the prospects for the cryptocurrency industry amid restrictions on crypto derivatives. He believes that new trading assets can be a decisive factor in the development of the industry.

The expert noted that there are no certain functions in the American crypto markets that are useful for diversifying risks and hedging portfolio assets.

“If one of the main goals of the financial market is the ability to express and transfer risk, then the presence of derivatives is crucial. Cryptocurrency markets in the US will not reach the level of development, maturity, or security seen in equity or bond markets without derivatives,” Harrison said.

The head of the US division of FTX emphasized that the developed market features that are currently missing in the crypto industry include: the ability to hedge, insurance positions, speculate on volatility in addition to the rate, earn interest through underlying trading, and achieve capital efficiency through margin.

Harrison is sure that derivatives are needed for the emergence of large players in the markets. It is they who help investors allocate capital to different positions without the need to own the entire underlying asset. The expert believes that institutional investors cannot yet directly own crypto assets, which gives derivatives a certain advantage.

“Tools for effective risk management will remain limited, and the cryptocurrency will not attract the institutional liquidity needed to mature,” Harrison said.

Previously, 8 Acre Perspective, on behalf of Nasdaq, conducted a survey among 500 financial advisers, more than 70% of which are ready to invest clients’ funds in digital currencies with a high degree of probability. 38% of respondents are confident that the SEC will approve a spot crypto ETF this year.

“The vast majority of advisors we interviewed plan to either start allocating funds to crypto or increase their existing allocation,” said Jake Rapaport, head of digital asset index research at Nasdaq.

Among advisors investing in crypto assets, more than 85% are ready to increase the share of digital currencies in their portfolios over the next year.