FTX Founder SBF Hearing Transcript: Current Operations, Future Development, and Regulatory Recommendations
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FTX Founder SBF Hearing Transcript: Current Operations, Future Development, and Regulatory Recommendations
SBF agrees that Congress should grant the CFTC greater authority and clarify jurisdiction over digital asset matters.
Navigating Web3 tides with focused insightsFTX CEO Samuel Bankman-Fried (SBF) participated in a hearing hosted by the U.S. Senate Committee on Agriculture, Nutrition, and Forestry at 23:00 Beijing time on February 9. The hearing’s theme was “Examining Digital Assets: Risks, Regulation, and Innovation.” Other participants included Rostin Behnam, Chair of the Commodity Futures Trading Commission (CFTC), and Sandra Ro, CEO of the Global Blockchain Business Council.
Rostin Behnam is advocating for the CFTC to play a leading role in regulating digital assets, a view SBF supports. SBF elaborated from multiple angles on the importance of an active role for the CFTC.
In addition, during this hearing, SBF provided detailed remarks on FTX's current operations, product development, compliance progress, the regulatory landscape for digital assets, approaches to stablecoin regulation, controversies around blockchain energy consumption and environmental impact, and FTX's investor protection framework. The following summary is compiled and edited by Planet Daily based on the hearing transcript.
1. FTX’s Current Operations
FTX was co-founded by Samuel Bankman-Fried, Gary (Zixiao) Wang, and Nishad Singh. It launched international operations in May 2019 and began its U.S. exchange business in 2020. Since its launch, FTX.com has experienced rapid growth, with daily average trading volume reaching approximately $15 billion—about 10% of global crypto trading volume.
FTX currently operates and holds licenses across dozens of jurisdictions worldwide, including the United States and Europe. It has millions of registered users: FTX US serves about one million users (mostly from the U.S.), while approximately 45% of FTX.com users are from Asia, 25% from the European Union (EU), and the remainder from other regions.
FTX employs a globally diverse workforce with different ethnic backgrounds. Women occupy 60% of senior management roles, and most of the global leadership team comes from varied cultural backgrounds, making FTX a truly global enterprise.
2. Addressing Blockchain Energy Consumption
FTX is committed to environmental sustainability and reducing climate impact. First, FTX does not operate factories or produce physical goods, nor does it rely on global shipping networks, making it a low-energy-consumption business. Additionally, FTX has a small workforce and minimal physical office space, operating via a globally distributed, online model that avoids direct contribution to large-scale climate change.
Second, although depositing and withdrawing digital assets on the FTX platform requires minor energy use, 80% of deposits and withdrawals occur on low-cost, carbon-efficient proof-of-stake (PoS) blockchains.
Third, FTX actively offsets the environmental costs associated with public blockchain mining by purchasing carbon credits.
Fourth, the energy consumption and impact of proof-of-work (PoW) blockchains should be evaluated in proper context. For example, Bitcoin has delivered significant benefits to many people—measured through access to financial products, asset transfer, and wealth creation—and these benefits should be weighed against the network’s energy costs. Furthermore, Bitcoin futures trading under CFTC oversight has minimal environmental impact.
3. FTX’s Product Ecosystem and Its Role in the Digital Asset Economy
Digital Asset Exchanges:
FTX’s core offering is its digital asset exchange platform, comprising FTX.com, FTX.us, and FTX US Derivatives (note: FTX.us and FTX US Derivatives are currently merging). On FTX.com and FTX.us, users can trade digital assets with others for cash, stablecoins, or other digital assets.
The platforms also offer futures and volatility contracts linked to digital assets. FTX.com provides cash-settled quarterly (and perpetual) futures contracts with leverage capped at 20x (i.e., minimum 5% margin), though typically lower in practice. FTX.us does not support leveraged trading.
FTX lists around 100 stablecoins and other digital assets on its spot markets, including Bitcoin (BTC), Ethereum (ETH), Uniswap Protocol Token (UNI), Chainlink Token (LINK), Solana (SOL), and Aave (AAVE).
Lending Services:
Users on FTX can lend their digital assets to others seeking spot trading exposure. Users may post collateral in the form of cash, stablecoins, or other digital assets held in their accounts, then submit loan requests to those willing to lend. FTX maintains a lending/borrowing order book, matching borrowers with lenders.
NFT Marketplace:
FTX operates a marketplace where users can mint, buy, and sell NFTs. Users can display their NFT collections on the FTX NFT marketplace and engage in buying and selling transactions, or purchase NFTs listed by sellers.
FTX Pay:
FTX Pay is a service offered to merchants enabling them to accept payments in digital assets or fiat currencies.
Staking:
FTX.com allows users to "stake" certain supported digital assets on the platform, earning staking rewards in return.
4. The Regulatory Landscape for Digital Assets and the Role of the CFTC
Currently, U.S. regulation of digital asset trading relies on a patchwork of federal market rules and state-level money transmission laws, which increases operational complexity for digital asset platforms and hinders effective risk management.
For example, FTX US offers both “cash” or “spot” markets and derivatives markets through FTX US Derivatives, but each type of regulation applies differently.
In the U.S. spot market, if a digital asset qualifies as a security under the Securities Act of 1933, it falls under the jurisdiction of the U.S. Securities and Exchange Commission (SEC). Such assets, and any platforms listing them, typically must register with the SEC.
However, digital assets that do not meet the definition of a security under U.S. law usually still qualify as “commodities” under the Commodity Exchange Act (CEA). Historically, the CFTC has generally not exercised jurisdiction over spot commodity markets (with few exceptions). Therefore, FTX believes the CFTC could exercise jurisdiction over spot markets for non-security digital assets.
In reality, U.S.-based crypto exchange operators are subject not only to SEC and CFTC oversight, but also to regulations in many states, which require local digital asset platforms to comply with state money transmission laws and obtain state-level licenses. However, these state laws lack the principles of federal market regulation, market integrity, and investor protection.
For U.S. derivatives markets, if the underlying digital asset in a contract is a commodity rather than a security, the derivative is regulated by the CFTC. Currently, the CFTC oversees BTC and ETH derivatives trading on several U.S. platforms, including FTX US Derivatives.
FTX believes many other digital assets are not securities and therefore their derivatives should also fall under CFTC jurisdiction and could be listed on appropriately registered platforms such as FTX US Derivatives.
Due to unclear regulatory boundaries between the CFTC and SEC, gaps exist in federal market oversight:
First, the CFTC’s jurisdiction does not extend to all cash markets for non-security digital assets, meaning U.S. customers of these platforms lack enforceable legal protections related to market integrity and investor interests. Second, not all digital assets meet the U.S. legal definition of a security, resulting in no clear, consistent, or enforceable disclosure standards to inform investors about risks associated with these assets. In short, there is no clear market supervision for spot trading of (non-security) digital commodities.
In fact, the SEC has not clearly defined whether digital assets qualify as “securities,” discouraging participation in the U.S. digital asset market. Entrepreneurs, institutional market participants, and other investors are hesitant to enter the U.S. market.
It is estimated that 95% of FTX’s trading volume occurs outside the U.S., and many have already left the U.S. to build and grow their businesses elsewhere. FTX believes this situation undermines U.S. competitiveness and prevents the country from capturing the benefits of the evolving digital asset industry—including attracting high-quality capital, top global talent, intellectual property, and tax revenue.
Moreover, hundreds of billions of dollars in dollar-backed stablecoins (anchored assets) are in circulation. Clear and consistent regulatory frameworks could help maintain the dominance of the U.S. dollar.
Regarding stablecoin regulation, stablecoins have become a critical component of the U.S. and global digital asset ecosystem. They are frequently used to transfer collateral across platforms and serve as collateral on some exchanges. Currently, the U.S. regulatory treatment of stablecoins suffers from the same “patchwork” problem discussed earlier.
At present, stablecoins used on some digital asset platforms are primarily issued by a few nationally regulated trust companies, benefiting from national prudential oversight. Other stablecoin issuers lack federal or state licensing. The recent report from the President’s Working Group on Stablecoins (“PWG Report”) offered multiple recommendations for stablecoin regulation. FTX has also shared its own suggestions on ensuring stablecoin safety and robustness, centered on a strong audit and registration framework supervised by federal agencies.
5. Vision for the CFTC as a Digital Asset Regulator
The CFTC already possesses extensive experience and expertise in digital asset regulation. FTX believes this expertise should be leveraged for the public good and the benefit of the digital asset industry.
Eight years ago, the CFTC approved the first BTC derivatives contract for listing. FTX US Derivatives—the first crypto-native platform approved by the CFTC—has been licensed and regulated by the CFTC, demonstrating the agency’s long-standing engagement with digital assets.
Congress should actively consider how the CFTC can better ensure market integrity and investor protection, allowing the U.S. to fully benefit from industry growth. Specific recommendations include:
Expand CFTC jurisdiction over spot trading of digital assets: FTX recommends expanding CFTC authority to cover all spot transactions involving retail investors and (non-security) digital assets, regardless of whether they currently fall under CFTC jurisdiction per Section 2(c)(2)(D) of the CEA.
Congress should encourage the CFTC to collaborate with the industry, allowing retail commodity transaction contracts linked to digital assets to be listed upon CFTC registration, leveraging the agency’s authority under Section 2(c) of the CEA.
Congress could eliminate the 28-day “actual delivery” period in the CEA related to digital asset transactions, as doing so would clearly bring more retail transactions under the full protections of the CEA, which FTX believes would significantly serve the public interest.
Congress could more broadly amend the CEA to grant the CFTC jurisdiction over all (non-security) digital asset spot trading activities—not just retail commodity transactions under Section 2(c)(2)(D)—as well as derivatives involving (non-security) digital assets.
Overall, Congress should actively encourage the CFTC to expand its interpretation of authority over spot digital asset trading to streamline and consolidate regulations governing U.S. digital asset activities.
Congress, the CFTC, and the SEC should jointly develop a plan allowing digital asset platforms with overlapping jurisdiction to opt into a joint regulatory program administered by both the CFTC and SEC, based on FTX’s key principles for market regulation.
Embrace the direct-membership market structure of digital-asset platforms. The CFTC should continue to permit and recognize market structures that allow investors to become direct members of CFTC-licensed digital asset exchanges and clearinghouses without intermediary involvement.
Under this CFTC-regulated market structure, FTX has operated for nearly five years with zero customer fund losses or major platform disruptions, proving this model can comply with the CEA and continue delivering the investor protections enshrined in the CEA.
FTX has published key principles for investor protection on digital asset platforms, including:
1) Maintain sufficient liquidity resources to ensure the platform can return customer assets upon request;
2) Ensure secure custody environments for customer assets (including digital wallets);
3) Maintain accurate books or ledgers for assets and disclosures to prevent misuse or improper allocation of customer funds;
4) Implement appropriate risk management practices, including market, credit/counterparty, and operational risk;
5) Avoid or properly manage conflicts of interest.
While CFTC rules already reflect these principles, they often assume intermediaries such as “futures commission merchants” bear responsibility for investor protection. However, as long as these investor safeguards are ensured and enforced, the CFTC can support and adopt superior market structures.
Regarding stablecoin safety and robustness, although the recent PWG Report calls for stablecoin issuers to face bank-like regulation, some requirements may be unnecessary as long as core regulatory goals are met. These essential requirements include:
1) Daily attestation of reserves backing the stablecoin (cash, bonds, etc.);
2) Periodic audits verifying reserve adequacy and consistency with issuer claims;
3) Oversight and inspection of stablecoin reserves by a federal agency;
4) Blacklisting addresses and individuals linked to financial crimes by enforcement authorities.
The CFTC can play a key role in establishing a practical framework incorporating these requirements for two main reasons:
First, Congress could empower the CFTC to license stablecoin issuers and enforce core regulatory requirements—either by creating a new registration program for stablecoin issuers or allowing them to seek existing CFTC licenses. For instance, a DCO (Derivatives Clearing Organization) license involves asset custody, reporting, audits, and risk management through proper collateral handling and mark-to-market practices—responsibilities closely aligned with those required of stablecoin issuers.
Second, creatively leveraging the CFTC’s existing authority can help establish standardized practices for stablecoin issuers, enhancing the safety and stability of the broader financial system. There is an urgent need for a practical regulatory solution that promotes disclosure and transparency without undermining the value stablecoins provide to market participants. Regulation of digital assets will be iterative and phased. For stablecoins, setting disclosure and transparency requirements based on general principles now would yield significant regulatory benefits.
In conclusion, FTX believes the CFTC can play a more prominent role in the digital asset ecosystem, filling past regulatory gaps and providing greater, more comprehensive protection for investors.
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