FTX Exchange

What is FTX Exchange?

FTX Exchange is a leading centralized cryptocurrency exchange specializing in derivatives and leveraged products. Founded in 2018 by MIT graduate and former Jane Street Capital international exchange-traded funds trader Sam Bankman-Fried, FTX offers a range of trading products, including derivatives, options, volatility products, and leveraged tokens. It also provides spot markets in over 100 cryptocurrency trading pairs such as BTC/USDT, ETH/USDT, XRP/USDT, and its native token FTT/USDT.

Bahamas-based FTX and its FTX US affiliate have overlapping management teams but separate capital structures. U.S. residents can only trade through FTX US.

Key Takeaways

  • FTX is a centralized cryptocurrency exchange specializing in derivatives and leveraged products. It supports most commonly traded cryptocurrencies.
  • FTX's key product offerings include futures, leveraged tokens, options, MOVE contracts, and spot markets.
  • FTX is based in the Bahamas and does not serve U.S. residents, who can trade on FTX US instead.
  • FTX and FTX US are affiliates with overlapping management teams but separate capital structures.

Basics of FTX Exchange

FTX's wide range of products and easy-to-use desktop and mobile trading apps draw crypto investors of all skill levels, from beginners to seasoned professionals or, in crypto jargon, from newbies to whales. The FTX platform offers a comprehensive range of order types, from basic market orders to more complex trailing stop orders.

FTX competitive futures and spot markets trading fees ranged from 0.04% to 0.07% for market takers, based on the maker and taker model, as of January 2022. Meanwhile, leveraged tokens carried a creation and redemption fee of 0.10% and a daily management fee of 0.03%. FTX supports nine fiat currencies that investors can deposit and withdraw via a wire transfer: the U.S. dollar, euro, British pound, Australian dollar, Hong Kong dollar, Singapore dollar, Canadian dollar, Swiss franc, and Brazilian real.

FTX doesn't charge deposit or withdrawal fees for most crypto assets. All bitcoin withdrawals greater than 0.01 bitcoin are free. Withdrawals of less than 0.01 Bitcoin per day are charged a fee of 0.1% after the first one, which is free. Fiat currency withdrawals valued at more than $5,000 USD are free, as is one withdrawal per week below that amount.

FTX US trading fees for market takers ranged from 0.05% to 0.4% as of January 2022. Non-fungible token (NFT) fees are $1 to list an NFT using its self-service tool and 2% charged to the seller from each sale or trade. Wire transfer fees are 1% of U.S. dollar deposits and withdrawals, with a minimum of $5 and a maximum of $35. There are no deposit fees for blockchain transfers. FTX US pays the withdrawal blockchain fees for all tokens except ERC20/ETH and OMNI.

FTX US customers must verify their identities to qualify for full access under know your customer (KYC) rules. KYC Tier 1 customers are limited to single deposits of $2,999, daily deposits of $10,000 and ACH deposits of $500 for any rolling 10-day period. KYC Tier 2 customers are limited to single deposits of $20,000 and ACH deposits of up to $30,000 per 10-day rolling period.

Key Products

FTX's key products include futures, leveraged tokens, options, MOVE, and spot markets.

Futures: Traders can take both long and short bets on leading cryptocurrencies using over 100 quarterly and perpetual futures pairs with margins of up to 101x. Stablecoins, such as USD and tether (USDT), are used as collateral to open and maintain positions.

Leveraged Tokens: FTX offers ERC20-based tokens that provide traders up to 3X leveraged exposure against the underlying trading pair. For instance, if a trader opens a BULL/USD - 3x long Bitcoin token and Bitcoin rallies 10% from the time of purchase, the leveraged token would gain 30%. FTX's leveraged tokens have no margin requirement.

Options: Traders can speculate on future price direction and hedge against their open positions with a range of call and put options that give the holder the right but not the obligation to buy or sell at a future strike price.

MOVE: These contracts allow traders to bet how far the price of a cryptocurrency will move over a time period, irrespective of the direction, essentially making them a play on volatility. As long as the price of the underlying cryptocurrency moves over a specific dollar amount—either up or down—the contract generates a profit.

Spot Markets: FTX offers over 100 different spot trading pairs, providing exposure to leading cryptocurrencies, such as Bitcoin, Ethereum, Binance Coin, Chainlink, and Ripple's XRP.

FTX US offers nearly 60 cryptocurrency and currency spot trading pairs, along with option contracts denominated in 0.01 Bitcoin and 0.1 Ether, cryptocurrency swaps, and Bitcoin mini futures. It also operates a marketplace for non-fungible tokens.

FTX offers futures pairs with margins up to 101x to long or short leading cryptocurrencies, allowing traders to take advantage of comparatively small price movements.

Regulation

FTX is incorporated in Antigua and Barbuda and headquartered in the Bahamas after moving from Hong Kong in September 2021. Its FTX Digital Markets Ltd. unit is regulated by the Securities Commission of the Bahamas. The exchange does not offer services to U.S. residents.

U.S.-based crypto traders can access FTX US—a registered money services business with FinCEN. In October 2021 FTX US completed its acquisition of LedgerX, rebranding it as FTX US Derivatives. FTX US Derivatives is licensed as Derivatives Clearing Organization, Swap Execution Facility and Designated Contract Market by the U.S. Commodity Futures Trading Commission (CFTC).

Management and Capital Structures

FTX and FTX US have overlapping management teams. Both companies list Sam Bankman-Fried as chief executive officer and co-founder Gary Wang as chief technology officer.

FTX closed a $400 million series C venture capital funding round in January 2022 valuing the company at $32 billion. Participating investors included Temasek, Paradigm, Ontario Teachers' Pension Plan Board, NEA, IVP, SoftBank Vision Fund 2, Lightspeed Venture Partners, Steadview Capital, Tiger Global, and Insight Partners. All investors involved in that funding round simultaneously participated in a series A funding round for FTX US valuing that company at $8 billion.

FTX Exchange is not regulated in the United States. U.S.-based traders can only access partner entity FTX US.

Celebrity Affiliations

As part of their marketing efforts, the parent companies of FTX and FTX US in September 2021 signed Golden State Warriors point guard Stephen Curry to a long-term promotional partnership, providing the NBA star an equity stake in FTX.

In August 2021, the same companies announced a long-term promotional partnership with venture capitalist and television personality Kevin O'Leary providing the "Shark Tank" host equity stakes in FTX and FTX US along with pay in cryptocurrency.

Article Sources

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  2. FTX. "About FTX."

  3. FTX. "Jurisdiction, Regulations, Licensing, and Practices."

  4. FTX. "MOVE Contracts."

  5. FTX. "Features Overview."

  6. FTX. "Fees."

  7. FTX. "Depositing and Withdrawing Fiat."

  8. FTX. "Blockchain Deposits and Withdrawals."

  9. FTX US. "Fees."

  10. FTX US. "Account Tiers and Limits."

  11. FTX US Derivatives. "Crypto Options and Futures Have Never Been Better."

  12. PR Newswire. "FTX US Finalizes Acquisition of LedgerX."

  13. FTX US. "About FTX US."

  14. Cision PR Newswire. "FTX Trading Ltd. Closes $400M Series C Round."

  15. Cision PR Newswire. "NBA Superstar Stephen Curry Becomes Global Ambassador and Shareholder of Leading Cryptocurrency Exchange FTX Through Long-Term Partnership."

  16. Cision PR Newswire. "FTX and Kevin O'Leary Announce Long-Term Investment and Spokesperson Relationship."

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