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 Verfasst am: 14. Apr 2023 09:24 Titel: Crypto Exchanges Are Now Eyeing Derivatives After FTX’s Coll |
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Crypto Exchanges Are Now Eyeing Derivatives After FTX’s Collapse
FTX, the cryptocurrency exchange that collapsed spectacularly in November, is considering reopening at some point in the future as it navigates bankruptcy, its attorneys from Sullivan & Cromwell said in a court hearing on Wednesday.To get more news about crypto exchanges, you can visit wikifx.com official website.
One potential option discussed was to let FTX's creditors convert a portion of their holdings to a stake in a reopened exchange.Andy Dietderich, the lead attorney for FTX, told the court that re-starting the exchange was one of many potential options being considered for the future of the company.
If that path is taken, Dietderich said, the plan would require significant capital to be raised, and said there was internal debate over whether that capital should come from the FTX estate's capital or third-party capital.
"There are possibilities that customers could have an option to take part of their proceeds that they would otherwise receive in cash from the estate and receive some kind of an interest in the exchange going forward," Dietderich said.
However, the attorney stressed that the possibility of re-starting FTX is one of many, and any decisions are far from final."There are as many opinions on this, I think, as there are professionals involved in this case," Dietderich said. "And that's a lot."The FTX attorneys also told the court they've recovered $7.3 billion in liquid assets from the defunct exchange, up from January's $1.9 billion tally. However, they added, FTX is still "far away from an equity distribution."
Crypto exchanges are rushing to fill the void left by FTX, once one of the largest derivatives exchanges for digital assets, as the cash market faces declining volume and liquidity.
FTX’s collapse has become an opportunity for other exchanges to capture market share or enter a space now dominated by Binance, the world’s largest crypto exchange. Some exchanges showed interests in buying FTX’s derivatives platform in the US, while others are just looking to build brand new derivatives exchanges. At the same time, the demise of several crypto lenders like Genesis Global Holdco LLC have left traders looking for other ways to leverage their positions.
There is a clear vacuum left in the crypto derivatives market, especially for regulated entities,” Tarun Chitra, partner at crypto venture fund Robot Ventures, said. “We’ve seen a number of companies show up on the centralized side as well on the decentralized side to fill this vacuum.”
As lenders like Genesis and Voyager Digital Inc. have gone bankrupt, derivatives platforms are one of the few remaining venues that let traders, especially institutional trading desks, lever up their trades in crypto. Institutions prefer products such as futures and options over spot trading because “derivatives enable them to have the ability to go long-short and express their view and hedge the portfolio,” said David Martin, head of institutional coverage at digital asset prime brokerage FalconX.
For hedge funds who primarily trade on US-based exchanges like CME Group Inc., the cash-settled futures contracts also prevent them from getting into nuanced crypto-specific problems such as custody, he added.
Some offshore derivatives exchanges offer a maximum leverage of 100 times for some cryptocurrencies, even after Binance, for example, said that it was reducing the maximum leverage a user can take to trade futures contracts to 20 times from 100 times.
The shakeup in the crypto industry, “opens up a lot of opportunities in the market because both FTX’s literal market share not existing anymore, and also their brand as somebody that was building innovative things in the space obviously no longer being the case,” Antonio Juliano, founder and CEO of decentralized exchange dYdX, said in an interview. |
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