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June 16, 2022

Ongoing Crypto Carnage Demonstrates Need for CFTC to Proceed Carefully with a Transparent, Robust Process for Considering FTX’s Auto-Liquidation Proposal

WASHINGTON, D.C.— President and CEO Dennis M. Kelleher issued the following statement in connection with sending a letter to Commodity Futures Trading Commission (CFTC) Chair Russ Behnam raising concerns related to the consideration of FTX’s auto-liquidation proposal:

“Today Better Markets sent a letter to Chair Russ Behnam of the CFTC urging him to ensure the process for considering FTX’s application to offer 24/7/365 margining and direct clearing for futures contracts on Bitcoin is transparent, robust, and meaningly inclusive of all viewpoints. The past few weeks of ‘crypto carnage’ has demonstrated how volatile an asset cryptocurrency is and how dangerous it could be if further integrated in the financial system without meaningful protections for investors, markets, and the public.  That is why the CFTC must approach the application of FTX to change its derivatives clearing organization (DCO) registration to allow it to offer direct clearing to customers for futures contracts on Bitcoin with a balanced, deliberative, and transparent process focused on the public interest.

“Unfortunately, such a process was lacking in the CFTC’s May 25th roundtable, as detailed in the letter.  For example, the topics to be discussed and the participants were not publicly released before the meeting, participation was heavily tilted in favor of industry participants, the moderator was not neutral, and the conversation overwhelmingly focused on industry concerns.  The result was a roundtable that left the distinct impression that approving FTX’s application was simply a matter of satisfying some members of the industry who are concerned that FTX’s application would eat into their profits, rather than addressing the various serious risks it poses for investors, markets, and the public.  To ensure that the public has confidence in whatever decision the CFTC makes on the application, we urge Chair Behnam to ensure that future actions on FTX’s application are fully transparent and designed to ensure that the viewpoints of all stakeholders are seriously considered, not just those of the industry.”

Read our full letter here.

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Better Markets is a non-profit, non-partisan, and independent organization founded in the wake of the 2008 financial crisis to promote the public interest in the financial markets, support the financial reform of Wall Street and make our financial system work for all Americans again. Better Markets works with allies—including many in finance—to promote pro-market, pro-business and pro-growth policies that help build a stronger, safer financial system that protects and promotes Americans’ jobs, savings, retirements and more. To learn more, visit www.bettermarkets.org.

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