FTX boss Sam Bankman-Fried says the crypto world must act more responsibly to show it doesn't need strict regulation, as he hits out at scammers
Cryptobillionaire Sam Bankman-Friedhas said the industry needs to act more responsibly.
- He said scammers, in particular, were drawing regulatory scrutiny to the cryptocurrency industry.
- Exchanges such as Bankman-Fried's
FTXare feeling the pressure as watchdogs tighten their grip.
AdvertisementThe cryptocurrency industry needs to prove that it's responsible and doesn't require super-strict regulations, according to Sam Bankman-Fried, a 29-year-old crypto billionaire.
Bankman-Fried, who co-founded the FTX crypto exchange, singled out crypto scammers for criticism in an interview with Insider last week, saying they made lawmakers want to stamp down on the industry.
Regulators and governments globally are increasing their scrutiny of the crypto world, following a boom in digital assets in 2020 and 2021. Lawmakers such as Sen. Elizabeth Warren have argued that the trading of highly volatile cryptocurrencies poses big risks to consumers and requires more oversight.
Bankman-Fried told Insider that he's taking regulation "extremely seriously" and that it's his biggest focus, especially in the wake of the global regulatory crackdown on Binance, an exchange that offers similar derivative products to FTX.
"I just wish that the industry were, as a whole, doing a more conscientious job of interfacing with regulators," he said, adding that players in the crypto space need to be "responsible and show that they don't need to have overly paternalistic regulations."
He added: "Every time there's a scam in crypto, that's going to be pushed by regulators to lock down the industry more." His comments came weeks after hackers took $610 million from a crypto platform, before returning all of it. The Federal Trade Commission said in May that reports of
Read more: A 29-year-old crypto billionaire shares how investors can use Tesla or Apple stock as collateral to buy bitcoin or ether
Bankman-Fried founded FTX, which is now the fourth-biggest crypto exchange by volume, in 2019. It specializes in cryptocurrency derivatives, products that let traders bet on the direction of tokens like bitcoin without actually owning the underlying asset. A funding round in July valued FTX at $18 billion.
FTX has tried to show that it's responsible by cutting the amount of leverage traders can have on the platform from 100 times to 20 times, Bankman-Fried said. Leverage allows traders to borrow money to generate bigger returns, but it can also cause big losses.
But he said regulating crypto effectively will require both watchdogs and crypto companies to work together. He said there's a risk that too much regulation could add a lot of friction to using crypto, "killing the use for it in the first place."
AdvertisementRegulators are still working out exactly how they'll tackle the sprawling industry, given the diverse mix of assets and technologies that fall under the broad category "crypto".
Securities and Exchange Commission (SEC) chair Gary Gensler has called on Congress to give the
Bankman-Fried said the crypto world is increasingly aware that it needs to present a professional front, citing the ultimately futile efforts to combat a tax reporting requirement in the US infrastructure bill in recent weeks.
"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." He said the goal is to be "allies rather than enemies of regulators."
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