- Sam Bankman-Fried’s FTX allows investors to invest in equities that trade on the US stock market.
- Traders can use stocks like Apple or Tesla to buy cryptocurrency, he said in a RealVision interview.
- The tokenized equity trading service is not available in the US or other restricted jurisdictions.
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Sam Bankman-Fried, a legend in the world of crypto trading, runs his own derivative-trading exchange, FTX.
The platform, which sees more than $400 billion in monthly trading volume, allows investors to manage collateral through a single wallet. That means traders could trade anything as long as they have enough collateral to meet their position size.
His crypto-arbitrage trading strategy pulled in 10% daily-returns on $10 million crypto-trades, helping him fetch a net worth that got him onto the Forbes list of cryptocurrency billionaires at just 29 years old.
FTX has changed the game of investing by allowing not just crypto trading, but round-the-clock fractionalized stock trading — or buying slices of expensive stocks. This means an authorized investor could buy tokenized Apple stock even at 2 a.m. ET on the exchange.
“You can use Apple as collateral for ether or Tesla’s collateral for bitcoin or euros as collateral for SPY or whatever combination you want,” he said in a recent interview with RealVision. “We cross-margined everything. You can buy fractional shares, there’s no minimum of a one share thing, and there’s some really cool stuff on the horizon for that.”
In order to trade tokenized stocks, and use them in exchange for a digital currency, a user should pass the second-tier of KYC requirements, including a description of source assets. This can take up to a day for clearance.
FTX launched its fractional stock offering late last year, allowing access to some of the most in demand stocks like Tesla, Apple, and Amazon.
But traders in the US and other areas including Iran and North Korea aren’t allowed to trade tokenized stocks, according to the platform’s support page. The crypto billionaire explained there isn’t a clear regulatory structure for crypto derivatives in these jurisdictions.
“The US volume is largely going up on the US exchanges which are entirely spot, with Coinbase being the biggest of those,” he said.
But one downside to the freedom of trading outside regular market hours is that there are some liquidity risks.
“All bets are off to some extent,” Bankman Fried said. “You should be conscious of that. You should be conscious of the fact that maybe news has come out in this, and you don’t know, and there are no markets to look out for it.”
He said there are no concrete plans for FTX to go public, but it’s something they would consider.
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