FTX Crypto Bahamas Notes: Encryption could reshape the financial system

Boomer Bankers Bow to Blockchain Billionaires on the Beach in the Bahamas

Akash Pasricha

The Information

FTX

Crypto Bahamas, a blockchain conference hosted by SALT and FTX, wrapped up last week. Unlike previous SALT conferences, Crypto Bahamas has moved to Nassau in addition to its theme change. The event was impressive and attracted many traditional investment bankers. What's the appeal of crypto finance? Listen to the traditional investment bankers.

This article was written and translated by The Information's senior business correspondent Akash Pasricha.

「这是 LaGuardia 机场，这座机场建于 1920 年代 。」

Anthony Scaramucci, founder of Skybridge Capital and SALT, explains while drawing on a blank sheet of paper. Akash Pasricha is sitting next to Anthony Scaramucci at his hotel in the Bahamas, trying to understand why Scaramucci is so bullish on cryptocurrencies.

"LaGuardia airport is very old. It was built as it went along, and this time they add one facility and then they build another, and by 2020, LaGuardia airport looks very bad."

Author's note: LaGuardia Airport is one of the three major airports in New York City, and is highly used because it is closest to Manhattan. Wide-bodied aircrafts take off and land most frequently at this airport.

Anthony Scaramucci likened modern finance to LaGuardia Airport, pointing out that it is a system that tinkers with past economic events.

"Modern finance is like LaGuardia Airport. Then you see the new Dubai airport, which is spectacular. So you see jpmorgan, Goldman Sachs, Morgan Stanley, slow and old Activities."

Anthony Scaramucci drew a big cross on the paper.

"But now there's FTX, Coinbase, Binance, and they don't have any baggage."

Manuscript by Anthony Scaramucci (Source: The Information)

Simply put, Anthony Scaramucci is bringing Wall Street bankers to the Bahamas for a reason: a new financial system with no old baggage.

Crypto Bahamas is not bad compared with SALT's traditional financial conferences of the past.

Baby boomers are ready to embrace crypto finance

Former President of the United States;Bill Clinton, former British Prime Minister & NBSP;Tony Blair  They represent seasoned global political leaders; Legendary quarterbackTom Brady They represent superstars in sports. In addition, things like NBSP;Katy Perry, DJ Steve Aoki and One Direction's Liam Payne Such a hot pop star came to the Bahamas.

Crypto Bahamas attracts over 2,000 financial professionals for three days of discussions, including & NBSP;Thrid Point  Executives from hedge funds and Apollo were here.

Unlike traditional financial conferences, these boomer investment bankers were joined by a fair number of crypto entrepreneurs, including.Alchemy, Anchorage, Dapper Labs  These crypto guys, and what these guys have in common is they're pretty young. They may be half the age of a traditional investment banker but have similar assets.

Author's note: Baby boomers are those born between 1946 and 1964 after The end of World War II. The Economist also calls this generation the "sponge generation", meaning they suck up the resources of their offspring.

If readers can't imagine the two camps, they can see it from the two organizers:Anthony Scaramucci and Sam Bankman-Fried, founder of FTX.

Anthony Scaramucci wore a neat oilhead with a bright navy suit and polished shoes. SBF, by contrast, is shorts, faded T-shirts, your dad's sneakers, and the signature explosion of curly hair.

"If you want to know my tailor, you can come to me."

Anthony Scaramucci joked at the opening.

Anthony Scaramucci and SBF (Source: The Information)

In the past, traditional Wall Street has scoffed at Crypto finance as an alternative to traditional finance, but Crypto Bahamas proves that traditional Wall Street types are ready to embrace blockchain and Crypto finance.

It's like the Chicago ExchangeCitadel Securities firms have recently accepted crypto venturesParadigm  The investment. Fidelity and BlackRock bought a stake in USDC staboin publisher Circle, with Fidelity announcing it would offer investors an investment option in Bitcoin. The Bank of New York Mellon (BK) also bought a stake in Fireblocks, a crypto hosting company.

Cathie Wood, founder and chief executive of Ark Invest, also took the stage at Crypto Bahamas to say other investment brokers, such as Charles Schwab, will follow Fidelity.

These are examples of how Wall Street is embracing crypto finance.

Institutional allocations to Bitcoin will rise to 2.5%

Currently, only a small portion of institutional allocations are in cryptocurrencies, and Cathie Wood thinks institutional investors will increase their allocations to Bitcoin to 2.5% in the future. Kevin O'Leary, chief executive of O'Leary Ventures, agrees, but it requires a clearer regulatory framework.

Former securities trader Paul Atkins told Akash Pasricha that as more institutions allocate more assets to cryptocurrencies, the regulatory framework could become clearer.

"At some point, if there are too few institutions investing in cryptocurrencies, regulators will decide that crypto assets can be ignored or even that cryptocurrencies will eventually disappear."

Different investment horizons: 3 years vs. 30 years

The topics discussed at Crypto Bahamas also offer a different perspective from those discussed at SALT conferences in the past.

Brahm Pillai, managing director of Keystone Global, an investment bank, said the usual discussion at SALT's conference in the past focused on returns over the next one to three years.

"But this year I don't hear anyone talking about expected annualized returns. They don't want to talk about the next three years, they want to talk about the next 30 years."

That's why no one at the conference was upset by the sharp pullback in crypto assets over the past six months.

As Scott Freeman, co-founder of crypto trading firm JST Capital, puts it:

"Nobody cares."

Ftx.us president: Crypto and traditional finance are not necessarily competitors

In the world of traditional finance, investment banks and funds are often rivals, but crypto and traditional finance are not completely antagonistic.

In fact, most cryptofinance companies are open to traditional finance and even think that the two can complement each other. For example, traditional assets could be digitized and transferred to blockchain transactions, which would make financial operations more efficient and secure.

Brett Harrison, president of FTX.US, also spoke on stage about ftX.US's proposal to the CFTC.

theThe proposalChanging the way margin is handled, FTX lets users deposit collateral in their accounts, which can be cash or cryptocurrency. The system will calculate the margin position every 30 seconds and notify the user. If the margin falls too low, FTX will start liquidating user positions within seconds. The worst-case scenario is to sell the position to a liquidity provider for an "agreed amount."

Brett Harrison thinks such a technique would be far better than today's, and could improve the way clearing is done.

Anthony Scaramucci sees more innovations like ftx.us in the future. He believes crypto finance is faster and more flexible than traditional finance, which is also a global trend.

"If you tell me one day FTX will buy Goldman, I will tell you that will not let me surprised. Conform to the trend of the development of the financial world, into the encrypted exchange banking way more likely is buying Banks, rather than being bank takeover. Because, in contrast, encryption financial flexibility, are inherently more plasticity."

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