- Sam Bankman-Fried, a crypto millionaire, has stated that the sector has to be more responsible.
- He said that fraudsters in particular were causing the bitcoin business to be scrutinised by regulators.
- As watchdogs tighten their grip, exchanges like Bankman-FTX Fried’s are feeling the heat.
According to Sam Bankman-Fried, a 29-year-old crypto millionaire, the cryptocurrency sector has to demonstrate that it is responsible and does not require stringent restrictions.
In an interview, Bankman-Fried, who co-founded the FTX crypto exchange, singled out crypto fraudsters for criticism, claiming they made politicians want to crack down on the business.
Following a surge in digital assets in 2020 and 2021, regulators and governments throughout the world are expanding their scrutiny of the crypto sector. Senator Elizabeth Warren, for example, has suggested that trading in extremely volatile cryptocurrencies poses significant dangers to consumers and so deserves greater regulation.
Bankman-Fried told that he takes regulation “extremely seriously” and that it is his top priority, particularly in light of the worldwide regulatory assault on Binance, an exchange that provides comparable derivative products to FTX.
“I just wish that the industry were, as a whole, doing a more conscientious job of interfacing with regulators,” he added, adding that crypto players must be “responsible and show that they don’t need to have overly paternalistic regulations.”
“Every time there’s a scam in crypto, that’s going to be pushed by regulators to lock down the industry more.” His remarks come only weeks after hackers stole $610 million from a cryptocurrency exchange before returning it all. In May, the Federal Trade Commission said that accusations of cryptocurrency frauds had increased dramatically in 2021.
In 2019, Bankman-Fried launched FTX, which is presently the fourth-largest cryptocurrency exchange by volume. It specializes in cryptocurrency derivatives, which allow traders to speculate on the direction of tokens such as bitcoin without having to hold the underlying asset. FTX was valued at $18 billion in a financing round in July.
According to Bankman-Fried, FTX has attempted to demonstrate its responsibility by reducing the number of leverage traders may use on the platform from 100 to 20 times. Leverage allows traders to borrow money in order to increase their profits, but it may also result in significant losses.
However, he believes that effective crypto regulation would necessitate collaboration between regulators and crypto businesses. He believes that too much regulation may make it difficult to utilize crypto, thereby “killing the use for it in the first place.”
Given the wide mix of assets and technology that go under the broad label “crypto,” regulators are still figuring out how they’ll approach the huge business.
Gary Gensler, the chairman of the Securities and Exchange Commission (SEC), has called on Congress to grant the watchdog additional authority over trading venues and has hinted that crypto loan products might fall under its purview.
In recent weeks, Bankman-Fried cited the ultimately fruitless efforts to oppose a tax reporting requirement in the US infrastructure bill as evidence of the crypto world’s growing awareness of the need to portray a competent face.
“There’s a lot of discussion that was going on then, and probably should have been going on a lot earlier, about how we should be handling ourselves as an industry.” The objective, he added, is to be “allies rather than enemies of regulators.”