FTX’s Sam Bankman-Fried breaks down his 3 favorite use cases for blockchain tech — and
- Sam Bankman-Fried, also known as SBF, is the CEO and cofounder of crypto giant FTX.
- The exec says regulatory oversight on stablecoins is “crucial” for protecting crypto investors.
- In an interview on Wednesday, SBF broke down 3 main everyday use cases for crypto.
Crypto enthusiasts often tout the industry as more than just digital tokens that can either pump or drain your bags. Blockchain technology — which underpins cryptocurrencies — can be used to solve everyday problems, proponents say.
Sam Bankman-Fried, the CEO and cofounder of crypto giant FTX, broke down three blockchain use cases in an interview at the Bipartisan Policy Center on Wednesday.
In traditional equities, per Bankman-Fried, buying a share of a company can take an exuberant amount of time. Investors may think a trade goes straight from a brokerage like Robinhood to your account.
But let’s say you buy a share of Amazon, he says. It can take two days to deliver that share. This is because it goes through multiple parties like exchanges and market makers before the trade settles. The more third parties you go through, however, the more risk that’s acquired. SBF, as Bankman-Fried is also called by his initials, says firms can run out of regulatory capital and freeze trading for user activity, citing the GameStop frenzy as a prime example.
“If I want to buy bitcoin from you, how do I know that I’m really gonna get that Bitcoin? It’s because you send it to me on the blockchain and five minutes later, I have it,” he said.
Bankman-Fried argues that bitcoin, or any services conducted on-chain, are more transparent, faster, and cut out the middlemen.
“It’s on the ledger. It’s final. There’s no ambiguity about this intermediary,” the former Jane Street trader said. “I’m not worrying about some broker I’ve never heard of. You just send it on the blockchain. It’s clean.”
Crypto markets are also not restricted to Wall Street’s opening and closing bell. (There are no holidays, maybe just sporadic outages and frequent hacks.)
Second, if someone doesn’t have access to a bank account, remittance payments or cross border transfers are a common alternative. Money service providers like Western Union can have fees of up to 30% per transfer depending on the amount being sent, CNBC previously reported.
Countries like El Salvador declared bitcoin legal tender and gave citizens access to a digital wallet. President Nayib Bukele said this was one reason why he advocated for bitcoin’s adoption. The crypto wallet, dubbed Chivo, allows citizens the chance for free cross-border payments.
Third, SBF says he’s excited about blockchain integration in social media. Advocates romanticize decentralized social media, also known as DeSo, as a way for users to own their own data, instead of large tech companies like Meta or Twitter doing so.
Crypto regulation is ‘necessary’ and ‘good’
The 30-year-old billionaire welcomes regulation, specifically citing clear stablecoin oversight.
“I think it is, in principle, necessary and good. And in practice, I’m optimistic,” Bankman-Fried said. “Crypto is big enough and starting to touch enough things that it is important to have regulatory oversight. “
The latest draft of legislation from the House Financial Services Committee could place a two-year ban on algorithmic stablecoins, Bloomberg reported last month, an effort to protect investors from another collapse of a multi-billion dollar crypto ecosystem i.e. the TerraUSD meltdown.
Elsewhere, Federal Reserve chair Jerome Powell emphasized the need for “appropriate regulation” on a panel organized by the Banque de France last month.
“If you’re going to have private money creation across the country, really there needs to be a federal role, Powell said, adding: “We think it really should be the Fed that does play that role. That’s our principal focus right now.”
Chuck Mounts, the chief DeFi officer at S&P Global Ratings, said that Wall Street won’t begin allocating further until there’s a clear policy frame and streamlined risk assessment in the nascent space.
There needs to be some “policy clarity” in crypto. This “will allow the big institutional players and asset allocators to be more confident and comfortable in kind of dipping their toe in and start to allocate funds into this space,” Mount said at the Messari Mainnet conference in September.
Read More: FTX’s Sam Bankman-Fried breaks down his 3 favorite use cases for blockchain tech — and
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