FTX CEO says that derivatives exchanges in the US and Asia target different types of users

on Feb 3, 2020
Updated: Mar 11, 2020
  • FTX CEO, Sam Bankman-Fried recently spoke about crypto derivatives exchanges from the US and Asia, noticing a few differences between them.
  • According to him, Asian exchanges are better at serving retail users who appreciate the speed, while US exchanges are for institutions who want safety.
  • He admits that there are risky parts, but he also claims that the process through which US traders go through to set up an account lasts for days, when it could be done in hours.

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Derivatives exchange FTX, and its CEO, Sam Bankman-Fried, have made quite a few headlines in the past few months, especially when Binance announced an investment into the platform. Now, the derivatives exchange’s CEO once again attracted attention by explaining the difference between US and Asian derivatives exchanges.

In the recent episode of The Scoop, Bankman-Fried spoke about different derivatives exchanges in different regions. He stressed that exchanges such as BitMEX or OKEx — exchanges based in Asian countries — are more efficient when it comes to including retail traders.

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How do the exchanges differ?

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Exchanges from the US market, however, such as the CME Group, are better at providing services to traditional institutions, such as the ones on Wall Street. He added that retail traders expect to get set up on an exchange very quickly, which can be difficult to do on fully regulated US exchanges.

These exchanges require middlemen who would set up an account for each individual trader. After that, it also takes a few days for wire deposits to get processed, and only then can they start trading. Bankman-Fried says that retail traders see this as an unnecessarily long, clunky process. Asian exchanges do things differently, and their customers can actually be ready to start trading in five minutes.

He continued by saying that KYC can be done in half an hour, and the funds can be delivered within an hour. Simply put, the client could be ready to begin trading extremely quickly, and the setup the same as if the customer is the most sophisticated player in the industry.

On the other hand, he believes that large corporations are not used to the process being performed so quickly, and they need time and energy to conduct due diligence on Asian exchanges. For example, if Goldman Sachs wants to trade on OKEx, they would first try to understand how OKEx’s systems work, and other details, such as how to connect to the API, or who exactly would hold their funds.

In the end, the FTX CEO concludes that the two markets were created for different types of users. One group are crypto natives and retail traders who want to start off quickly, while the other ones are institutions that want to move slowly.


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