FTX’s Sam Bankman-Fried on Going Public, SPACs and a Bitcoin ETF

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Over the past year, the cryptocurrency market has become more popular than ever thanks to rising prices and greater institutional interest. In this environment, few have caused as much attention as Sam Bankman-Fried, the 29-year-old founder and CEO of the cryptocurrency derivatives exchange FTX.

Bankman-Fried caught the industry’s attention when tokens associated with him and his other firm, Alameda Research, shot in price. Bloomberg News also reported that FTX closed enough volume in April to make it one of the largest crypto exchanges.

Previously: Crypto Wunderkind’s tokens rise on top of the list

Bloomberg News asked him to weigh everything from regulatory risks to the prospects for an exchange-traded bitcoin fund. The interview took place on June 15th and the responses have been condensed and edited for clarity.

On the prospects for FTX’s IPO

When Coinbase Global Inc. made its public debut, many crypto insiders called it a tipping point and predicted that other digital asset companies would soon follow suit. When asked if his company is considering going public through either a traditional IPO or a direct listing (which is the path that Coinbase has taken), Bankman-Fried said his company has no firm plans right now, but ” that would be something we would not do stupidly “. to do our due diligence. “

FTX is profitable, he said, so there is no particular urgency or need to take a step now. But the discussions are likely to include a consideration of whether the legitimacy and attention that the process entails is appropriate for the effort and expense that would be required overall.

In the meantime, he has been approached by sponsors of special acquisition companies or SPACs, which are investment vehicles that raise money from investors and use it to buy into another company. “There are, frankly, not many plausible, exciting goals for them in crypto – we are one of the few,” he said. “If we wanted to go public through SPAC, I don’t think that finding the SPAC would be the limiting factor.”

Regarding the regulation

Since the crypto industry attracted greater attention over the past year amid rising prices, it has likely been scrutinized by regulators as well. Now there are plenty of signs that new regulatory announcements could be on the way. “Part of it is to be seen and part of it is to see where Gensler and, quite frankly, many other regulators, are issuing these things,” he said, referring to new head of the Securities and Exchange Commission, Gary Gensler.

Some areas could come into focus, including AML / KYC, which stands for anti-money laundering and know-your-customer compliance. “Preventing money laundering has probably always been the top regulators’ goal in most tax areas when it becomes relevant – and has certainly been prominent in crypto discussions for some time,” he said. “There has already been a lot of progress.”

Gensler has also specifically singled out crypto trading venues. He said in May that the exchanges “have no regulatory framework” and called on Congress to work on legislation that would give the agency oversight of the platforms.

On the outlook for a Bitcoin ETF

Meanwhile, U.S. regulators have repeatedly objected to the approval of cryptocurrencies in an exchange-traded fund wrapper, raising concerns about tampering and criminal activity. While ETF proponents were optimistic that Gensler would be more open-minded than his predecessor, the agency has already delayed a decision on at least two applications and is expected to be released by the next deadline on Jan.

Regardless, at least nine applications for Bitcoin ETFs have been filed with the SEC. And as these applications gather dust, issuers are getting more creative. Invesco launched a pair of ETFs that track crypto-left stocks last week, just days after an application was filed for the Volt Bitcoin Revolution ETF.

“What you see is not an outright rejection of the idea, but a kind of feeling of ‘Look, to be comfortable with a Bitcoin ETF we need to be comfortable with the Bitcoin markets,'” said Bankman-Fried, who was formerly an international ETF dealer on Jane Street. “And that means that you need to be sure that there is either very little manipulative activity or that manipulative activity would likely take place in places where we could track it down and get to the location because of what happened.”

About Bitcoin mining and its energy consumption

Crypto miners are using enormous amounts of computing power and energy to verify transactions on the blockchain, a process that has come into the spotlight in recent weeks following criticism from mega-mogul Elon Musk. Bankman-Fried said the topic was frustrating because, for one thing, there was productive conversation. “It is not at all sensible for Bitcoin forces to condemn it as a kind of witch hunt to raise this question because there is significant energy consumption currently taking place due to Bitcoin mining,” and it should at least be analyzed. he said. On the other hand, however, there are sensible containment solutions that will not mean the death of the cryptocurrency, he added.

“Basically the answer is: Due to the Bitcoin and Ethereum mining, there is currently a considerable, but not absolutely massive, energy consumption – it is unique for these two coins” and, due to a long search for fix, it is becoming the most commonly used blockchain. However, there are approaches to combat them, including switching to green energy sources and introducing carbon offsets. “The answer is that attenuation isn’t free, but it’s not that expensive,” he said. “Industry could pay for that without really backing off that much.”

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