We’re ready for more regulation in the crypto industry: FTX CEO

Sam Bankman-Fried, FTX Co-Founder and CEO joins the Yahoo Finance Live panel with the latest news in the crypto currency space.

Video transcript

ZACK GUZMAN: Welcome back to "Yahoo Finance Live." Today at the Aspen Security Forum, SEC Chair Gary Gensler has been speaking about potential regulations coming to the cryptocurrency sphere, hinting at an openness, though, for an ETF. Of course, the agency has delayed on approving more than a dozen Bitcoin ETF applications as they wait to try and nail the right way to regulate. And all of that comes as we see congressmen and women push to include up to $30 billion in taxes in the infrastructure push as well, potentially hitting the crypto sector and, again, bringing attention back to regulations in the space.

And for more on that, happy to bring on the CEO and Co-founder of FTX-- Sam Bankman-Fried joining us once again here. And, Sam, good to have you back with us. I think right now, obviously, the big headlines we've been watching is Gary Gensler potentially talking about an openness to that ETF, because we hear so much about how that would bring institutional investors back into the space and make it easier for money to flow in. But you as an exchange, I guess, how does maybe that conversation shift what you'd be doing as a business?

SAM BANKMAN-FRIED: Totally. And first of all, yeah, it would be a big deal for the space. And the biggest thing is people who know how to hold securities but don't know how to hold cryptocurrencies would now have easy access to crypto. By the time you're on FTX, it doesn't matter, because you can just buy Bitcoin straight up. You don't need to shoot through the ETF model.

And so it's not directly relevant, necessarily, to FTX. That being said, I think signaling an openness to innovative new products in the US crypto ecosystem is absolutely huge. And it's not that the US has been necessarily averse to it. Frankly, I think not that many people have tried. But I do think it's really encouraging to hear that Gensler is excited, at least in theory, for them.

AKIKO FUJITA: How many more investors do you think that brings into the fold? And I know we're talking a very broad question here, but if it really is about bringing more institutional names into the fold here and expanding and growing the space, what do you see as a potential through ETFs?

SAM BANKMAN-FRIED: Pretty big. So one thing you could do is you can look at-- on the consumer side, you can look at users of stock brokerage apps versus cryptocurrency brokerage apps. And you know, there are more users on the stock side. I do think that the fact that this would be available on E-Trade, on Webull, in addition to platforms like Robinhood that already offer crypto would be big.

But even bigger would be things like pension funds, mutual funds-- lots of fairly conservative, regulated entities that have collectively trillions under management and right now don't have a really easy way for them to hold Bitcoin that doesn't involve building out new systems. This would make it easy.

ZACK GUZMAN: Yeah, Galaxy Digital, Mike Novogratz founder, he's always talked about how the ETF would bring people into the tent, so to speak, to kind of get them interested in Bitcoin if that's the way they get involved. Then they turn to more advanced things like what FTX offers. But you guys don't just have that platform, you also have FTX.us.

And you've talked about 150 times liquidity growth there on that platform. It's really taken off. You also, of course, last time you were on, were talking about the $900 million raise and how you might be looking at M&A opportunities. But specifically in the US, you know, we also got this proposed bill from Representative Don Beyer talking about potential regulations around restricting private stablecoins and looking into maybe giving the SEC even more power to regulate some of these things-- lending platform, services, the like. I mean, does that maybe change you in looking to grow the US market or more money that you'd be putting there and pushing it elsewhere? Talk to me about how it might change the investment philosophy.

SAM BANKMAN-FRIED: You know, some of those are, if anything, even good. We know that more regulation is coming. It's been coming for a while. And we've been acting as if it has already come in a lot of cases. And we're ready for it in others.

It's not coming as a surprise to us. We knew there is going to be further SEC comments on which tokens might be securities. We've been conservative on the US side. Listing wise, pending more color. And on the stable coin side, we'll have to see exactly what form it takes. There may be some adopting of the stable coins.

But we're ready for that. That's not going to be massively changing our business, even if we do change it here and there to be in line with all the color that we're getting sort of in real time from regulators. But frankly, if anything, I think it might give us more clear avenues to product releases.

AKIKO FUJITA: And, Sam, speaking of increased scrutiny, you've got this provision in the Senate's infrastructure bill that essentially cracks down on taxes for those who are trading crypto-- essentially calling on brokers to disclose the information. I'm just curious what you make of this provision and what you think the impact is going to be more largely on the space.

SAM BANKMAN-FRIED: Totally. So there's sort of the obvious piece of this that everyone knows is going to be coming gaining clarity around, like, US crypto exchanges-- basically having tax reporting duties. That is not a surprise at all. We've been assuming that's coming any day. There's more complicated questions about what the impacts are at non-US cryptocurrency venues.

And some phrasings of this bill might envelop those as well. That would be a little bit more odd and complicated. But, frankly, that's something that we in the industry can adapt to. I don't see that as being unmanageable in any way. I think that when you look at the broader implications of it and some of the worries that some people in the industry have, it's around some of the broader phrasings that have been proposed for this bill.

That risk sort of like, you know, wrapping in something like a Bitcoin miner to this language in a way that I don't think is intended. But some of the language just sort of hasn't clarified what its stance would be on a large number of sort of semi-passive players in the industry. And so I think that that's sort of like what I know a lot of people have been working on with respect to this bill is just getting clarity on the scope of who it's pushing at, and I think clarifying that this is something that's going to be affecting certainly US crypto exchanges, maybe a bit more broadly than that, but I'm guessing not intended to affect dudes propagating blocks on the blockchain.

ZACK GUZMAN: Yeah, you know, you got kind of the other side of this when you look at the specific digital assets, which might be commodities or securities. Bitcoin, of course, now kind of looked at as a commodity, not needing to worry about that issue. But when you talk about the other ones and liquidity volumes there-- some of those, you know, more alt side of the trade-- it does make up some pretty significant volumes here. I mean, how important would it be, if we talk about regulation, some of those things getting taken off platforms say, you can't trade them as a broker or as an exchange-- what's the impact there?

SAM BANKMAN-FRIED: It's a good question. So the first thing is that the majority of crypto volume globally happens in cryptocurrencies that are widely believed to be commodities or similar in the US-- not close to 100%, but above 50%. And so it would certainly have some impact. It wouldn't be earth-shattering impact.

And the second thing I'll say is that one thing-- and I sort of want to apologize to the customer in some sense for this-- but FTX US has lifted substantially fewer assets than most US crypto exchanges has. And the reason for that is just questions on what exactly is a security, what is a commodity in this space. We are expecting to get more clarity on that coming down the pike.

We don't anticipate that it's going to mean major changes for FTX US. We've been ready for that. Like, we sort of made a lot of decisions with that in mind assuming that will happen. If it means changes what we offer, so be it. But frankly, I think it's not going to be a major shock to us. I think it might have a larger impact on some other venues in the US.

ZACK GUZMAN: All right, FTX co-founder CEO Sam Bankman-Fried coming back with us. Appreciate the time, man. Be well. We'll chat soon.