In 2019, Sam Bankman-Fried founded the crypto exchange FTX. FTX
In an interview with Forbes, Sam Bankman-Fried, CEO of FTX, defended the derivatives markets in Monday's interview.
According to the crypto billionaire, a derivative makes markets more efficient and provides liquidity for traders.
He reiterated his reasons for lowering the leverage limit on FTX in July.
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In an interview with Forbes, Sam Bankman-Fried, CEO of FTX, defended the derivatives markets and explained why he reduced leverage on his crypto exchange.
Bankman-Fried said that crypto derivatives are "a little misunderstood." People will notice that derivatives trade in crypto more volume than spot. This is true. This is true for every asset class around the globe.
According to the crypto billionaire, a derivative makes markets more efficient because it adds liquidity for traders who need token delivery but not crypto price exposure.
Bankman-Fried acknowledged that derivatives such as crypto futures can sometimes go wrong, such as when leveraged positions cause forced liquidations. These types of situations are often overemphasized and less important than the wider benefits of futures access.
He reiterated his reasons for lowering leverage limits on FTX July, a move which was mirrored in Binance, an exchange competitor.
"We didn't have it on day one, and it was the most sought-after feature by our users." Bankman-Fried stated that users were refusing the platform's use unless they had it.
As concerns grew about extreme leverage - which can sometimes multiplied trades by a factor 100 - FTX lowered its leverage limits to 20 times.
Bankman-Fried stated that "any position you take with such a high level of leverage cannot be essential for efficient markets."
Forbes interviewed the CEO of FTX, highlighting the importance of crypto regulation. This sentiment he also shared in an interview with Insider.
He told Insider that he wished the entire industry was more conscious about interfacing with regulators.