(Bloomberg) — Over the past year, the cryptocurrencies market has become more popular than ever thanks to surging prices and greater institutional interest. In that environment, few have made as big a splash as Sam Bankman-Fried, the 29-year-old founder and chief executive officer of the cryptocurrency derivatives exchange FTX.
Bankman-Fried caught the industry’s attention as tokens associated with him and his other firm, Alameda Research, surged in price. Bloomberg News also reported that FTX handled enough volume in April to make it one of the largest crypto exchanges.
Earlier: Crypto Wunderkind’s Tokens Surge on Best-Performing List
Bloomberg News asked him to weigh in on everything from regulatory risks to prospects for a Bitcoin exchange-traded fund. The interview took place on June 15 and answers have been condensed and edited for clarity.
On Prospects for FTX to go Public
When Coinbase Global Inc. made its public debut, many crypto insiders called it a watershed moment and predicted other firms in the digital-asset space would soon follow. When asked if his firm is considering going public either through a traditional IPO or a direct listing (which is the route Coinbase took), Bankman-Fried said his company didn’t currently have firm plans but “it’s something we’d be silly not to be doing our due diligence on.”
FTX is profitable, he said, so there isn’t a particular urgency or need to make a move right now. But discussions will likely involve a deliberation over whether the legitimacy and attention brought on by the process are commensurate with the effort and hassle it would require overall.
Meanwhile, he’s been approached by sponsors of special-purpose acquisition companies, or SPACs, which are investment vehicles that raise money from investors and use it to buy into another company. “There are, frankly, not very many plausible exciting targets for them in crypto — we’re one of the few,” he said. “If we did want to go public via SPAC, I don’t think finding the SPAC would be the limiting factor.”
As the crypto industry caught greater attention over the past year amid rising prices, it likely also garnered further scrutiny from regulators. Now, there are a lot of signs that new regulatory announcements could be on the way. “Part of this is wait-and-see, and part of it is seeing where Gensler and, frankly, a lot of other regulators as well, end up coming out on these,” he said, referring to new Securities and Exchange Commission head Gary Gensler.
A few areas could see increased focus, including AML/KYC, which stands for anti-money laundering and know-your-customer compliance. “Preventing money laundering has always been probably the single biggest goal of regulators in most fiscal areas when it becomes relevant — and certainly has been prominent in discussions around crypto for a while,” he said. “There’s already been a lot of progress on that front.”
Gensler has also singled out crypto trading venues specifically. He said in May that the exchanges “do not have a regulatory framework” and urged Congress to work on legislation that would give the agency oversight of the platforms.
On the Prospects for a Bitcoin ETF
Meanwhile, U.S. regulators have repeatedly demurred on allowing cryptocurrencies to be put in an exchange-traded fund wrapper, citing concerns about manipulation and criminal activity. While ETF advocates were optimistic that Gensler would be more open-minded than his predecessor, the agency has already delayed on a decision on at least two applications and is expected to punt again at its next deadline on June 17.
Regardless, at least nine filings for Bitcoin ETFs have been filed with the SEC. And as those applications collect dust, issuers have gotten increasingly creative. Invesco launched a pair of ETFs tracking crypto-linked equities last week, just days after an application for the Volt Bitcoin Revolution ETF was filed.
“What you see is not an outright rejection of the idea but rather sort of a sentiment of, ‘Look, in order to be comfortable with a Bitcoin ETF, we have to be comfortable with Bitcoin markets,’” said Bankman-Fried, who was formerly an international ETF trader at Jane Street. “And that means you have to be comfortable that either there is very little manipulative activity or that were there to be manipulative activity, it would be likely that it would be happening in venues where we would be able to track it down and get to the bottom of what happened.”
On Bitcoin Mining and its Energy Usage
Crypto miners use vast sums of computing power and energy to verify transactions on the blockchain, a process that’s come under a harsh spotlight in recent weeks following criticism from mega-mogul Elon Musk. Bankman-Fried said the topic has been frustrating because, for one, there’s a productive conversation to be had. “It’s not at all reasonable for Bitcoin forces to decry it as sort of a witch hunt to bring up this question because there is substantial energy usage happening because of Bitcoin mining right now,” and it should, at the very least, be analyzed, he said. But on the other hand, there are reasonable solutions for mitigation that don’t spell the death of the cryptocurrency, he added.
“Basically, the answer is: there is substantial but not absolutely massive energy usage going on because of Bitcoin and Ethereum mining right now — it is unique to those two coins,” and will soon be unique only to Bitcoin due to a long-sought fix for the most-used blockchain. But there are approaches to combating it, including switching to green energy sources and adopting carbon offsets. “The answer is that it’s not free to mitigate, but it’s not that expensive,” he said. “It’s something the industry could pay without really setting itself back that much.”
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