FTX CEO defends crypto derivatives, and Robinhood shares fall after the SEC chairman’s statement

FTX CEO considers cryptocurrency derivatives a “misunderstood” tool

Sceptics about crypto derivatives do not realize how important these instruments are in increasing the liquidity and efficiency of digital asset markets. This statement was made by FTX CEO Sam Bankman-Fried.

“This is a somewhat misunderstood area. A lot of people are seeing something happening and assume this is the first time it has happened in history. That might be true in some cases, but not in all. I think derivatives are a good example of this. People will note that derivatives trade more volume in crypto than spot, which is true. But that is true of every asset class in the world. The reason is basically that derivatives are a bit more efficient if you don’t need immediate delivery (spot). I think this adds liquidity to the markets and makes them generally more efficient, ”said Bankman-Fried.

The entrepreneur emphasized that derivatives offer great flexibility for investors, as they do not burden them with the difficulties associated with the storage of cryptocurrencies.

Robinhood stock price falls amid SEC chairman’s statement

The price of shares of fintech startup Robinhood fell amid the statement of the chairman of the US Securities and Exchange Commission. In a recent interview, Gary Gensler allowed the introduction of a ban on the payment for order flow scheme used by various online brokers. Robinhood shares fell nearly 7%.

For those who use the PFOF scheme, it is beneficial in that users are invited to formally make trades without commissions. However, the PFOF mechanism is opaque.

“They bring buyers and sellers together in these streams. Exit investors can get less on their sales and pay more on their purchases. This can become an obstacle to fair and efficient markets,” said Gary Gensler

--

--

Get the Medium app

A button that says 'Download on the App Store', and if clicked it will lead you to the iOS App store
A button that says 'Get it on, Google Play', and if clicked it will lead you to the Google Play store