FTX.US President Wants Crypto Derivatives Trading Within Year

In brief

  • FTX is one of the largest cryptocurrency exchanges in the world.
  • FTX.US has more limited offerings.
  • The US firm is working to bring crypto derivatives trading to the platform, to be regulated by the CFTC.

Cryptocurrency exchange FTX has quickly shot to the forefront of American crypto consciousness. Just see its long-term deal to name the Miami Heat arena and the ubiquitous media appearances of its founder, Sam Bankman-Fried.

But many of FTX’s financial products, including the popular derivatives products it made its name on, aren’t available to U.S. customers, who must use its affiliate, FTX.US. 

FTX.US president Brett Harrison told Decrypt the firm is working to change that and aims to offer derivatives trading within a year. 

“There are a number of contingencies involved in establishing this business, most importantly approval and support from the CFTC, so the exact timeline is difficult to estimate,” he said. The Commodity Futures Trading Commission regulates derivatives markets in the country.

Derivatives products, such as Bitcoin futures, allow people to buy or sell assets at a pre-established price. They represent a way to bet on crypto prices, to be sure, but they’re also a way to hedge risk in volatile markets.

FTX.US has two options for making derivatives trading a reality, assuming it can get approval from the CFTC: applying for its own license or acquiring another business that already has such a license. “Our plans for which path to take…are still under discussion and evolving,” he said.

Harrison stressed that even if the plan happens, it won’t make FTX.US look exactly like FTX.  “FTX US and FTX are separate companies and these will be entirely separate businesses,” he said. “Any derivatives trading on FTX US will be regulated by the CFTC and will thus involve different requirements (products, margin, etc.) from those on the international side.”

FTX is one of the top five exchanges globally in terms of trading volume, per data from Nomics, registering over $11.5 billion in the last 24 hours. By contrast, FTX.US has tallied $220 million in the same time frame.


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Ethereum price drops below $3K, but ETH options data reflects optimism

Ether’s (ETH) 81% rally over the last three weeks caught professional traders off-guard, and this week’s upcoming options expiry reveals that of the $430 million in contracts set to expire, only 7% of the neutral-to-bearish put options will be available if Ether holds above $3,200 on Aug. 13.

Ether price in USD at Coinbase. Source: TradingView

Curiously, the crypto market is holding its recent strength despite the Senate’s ‘crypto-critical’ infrastructure deal that recently passed. Although the $1 trillion infrastructure bill may encounter some lengthy hangups in the House of Representatives, the approved version did not clarify what constitutes a cryptocurrency broker, and this is expected to harm the industry in the future.

Institutional investors were likely behind the recent rally

Institutional investors’ adoption continues to increase and this week Neuberger Berman, a New York-based investment management firm, filed for a commodity-focused fund. The $164 million commodity strategy fund plans to gain crypto exposure using trusts and exchange-traded funds.

Furthermore, Coinbase exchange reported that 10 out of the top 100 largest hedge funds in terms of assets under management are clients of the platform. Even more interesting for Ether supporters was the ‘flippening’ that occurred as the exchange traded more Ether volume than Bitcoin (BTC) in the second quarter of 2021.

Coinbase cited the emergence of new use cases, including decentralized finance (DeFi), non-fungible tokens (NFT) and smart contracts as the reason for the high Ether volumes. Whatever the case was that fueled Ether price, bulls now enjoy a vast advantage leading into Friday’s options expiry.

Ether Aug. 13 options aggregate open interest. Source: Bybt.com

Open interest shows an apparent balance between calls and puts

The initial view shows a reasonable balance between the neutral-to-bullish call options and the protective puts, which indicates that bulls lacked the confidence to bet on the recent rally.

Moreover, more than half of the bets have been placed between $2,100 and $2,900. This data clearly shows that professional traders weren’t expecting a rally above $3,000.

The result is a meager $2 million of protective puts that will participate in Friday’s option if Ether holds above $3,200. This number increases to $19 million if bears manage to push the price below $3,100, and it rises to $27 million if Ether trades below $3,000 on Aug. 13.

Bulls currently lead by $165 million

$167 million of the call (buy) options have been placed at $3,200 or lower. The net result would then be a $165 million advantage for this neutral-to-bullish instrument. This gap will be reduced to $120 million if bulls fail to hold the $3,100 support.

A 10% negative move from the $3,200 price would reduce the neutral-to-bullish instrument advantage to a comfortable $90 million. Thus, there’s no reason to believe that bears will try to pressure the price solely due to Friday’s options expiry.

Currently, the bulls have complete control and will likely use their profits to create additional bullish bets for the upcoming weeks.

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph. Every investment and trading move involves risk. You should conduct your own research when making a decision.