Fed’s Barr signals stiffer oversight for cryptocurrency
Michael Barr, the Federal Reserve's top regulatory official, signaled
on Monday that stiffer oversight of cryptocurrency is in the offing,
after the collapse last week of crypto exchange FTX that sent shock waves through the industry.
Crypto-asset-related activity "requires effective oversight that includes safeguards
to ensure that crypto companies are subject to similar regulatory safeguards as other
financial services providers," Barr said in written testimony
released Monday ahead of an appearance at the Senate Banking committee Tuesday,
his first before Congress since assuming the role of Fed vice chair for supervision. "We do
not want to stifle innovation, but when regulation is lax or behind the curve,
it can facilitate risk taking and a race to the bottom that puts consumers, businesses, and the
economy in danger and discredits new products and services with consumers and investors."
After major crypto exchange FTX filed for U.S. bankruptcy protection on Friday,
the crypto industry is bracing for further fallout.
Some of FTX's investors have said they are writing their investment down to zero.
Other crypto firms may be exposed to FTX by having held tokens on the exchange or
by owning FTX's native token, FTT, which plunged around 94% last week.
While the extent of the contagion across crypto markets remains unclear,
here are some firms who have given information about their exposure to FTX.
BINANCE
Binance Chief Executive Changpeng Zhao sparked concerns among investors
on Nov. 6 when he said in a tweet that Binance would sell its holdings of FTT.
Zhao told a Twitter spaces event on Monday that Binance had previously held $580 million
worth of FTT, of which "we only sold quite a small portion, we still hold a large bag".
BLOCKFI
Embattled cryptocurrency lender BlockFi said it had significant exposure to FTX
and that withdrawals from its platform continue to be paused.
"We do have significant exposure to FTX and associated corporate entities that
encompasses obligations owed to us by Alameda, assets held at FTX.com,
and undrawn amounts from our credit line with FTX.US," BlockFi said.
In July, FTX had signed a deal with the troubled crypto lender to provide it with
a $400 million revolving credit facility with an option to buy it for up to $240 million.
CELSIUS NETWORK
Bankrupt crypto lender Celsius Network said in a tweet on Nov. 11 that it had 3.5 million Serum
tokens (SRM) on FTX as well as around $13 million in loans to FTX-linked trading company Alameda
Research. The loans were under-collateralised, mostly by FTT tokens, Celsius said.
COINBASE
Coinbase Global Inc said in a blog post on Nov. 8 that it had $15 million worth of deposits on FTX.
It said it had no exposure to FTT, no exposure to Alameda Research, and no loans to FTX.
It said it had $5 billion in cash and cash equivalents at the end of Q3.
COINSHARES
Crypto asset manager CoinShares has $30.3 million
worth of exposure to crypto exchange FTX, CoinShares said in a statement on Nov. 10.
CoinShares CEO Jean-Marie Mognetti said that the group's financial health remains "strong",
adding that its net asset value at the end of Q3 was 240.6 million pounds ($282.51 million).
CRYPTO.COM
Singapore-based crypto exchange Crypto.com said on
Nov. 14 it had moved about $1 billion to FTX over the course of a year,
but most of it was recovered and exposure at the time of FTX's collapse was less than $10 million.
CEO Kris Marszalek said the firm would prove all naysayers wrong on the platform being in
trouble, and that it has a robust balance sheet and took no risks.
GALAXY DIGITAL
Crypto financial services company Galaxy Digital Holdings Ltd said in its third-quarter earnings
statement on Nov. 9 - the day after FTX froze withdrawals - that it had a $76.8 million
worth of exposure to FTX, of which $47.5 million was "in the withdrawal process".
In the earnings call, Novogratz
said Galaxy had more than $1 billion in cash and $1.5 billion in liquidity.
GALOIS CAPITAL
Hedge fund Galois Capital had half its assets trapped on FTX,
co-founder Kevin Zhou told investors in a recent letter,
the Financial Times reported, estimating the amount to be around $100 million.
Galois did not respond to Reuters comment requests sent via email and its website.
GENESIS
U.S. cryptocurrency broker Genesis Trading's derivatives business has approximately $175
million in locked funds on FTX, the company said in a tweet on Nov. 10.
"Genesis has no material exposure to FTT or any other tokens issued by centralized exchanges,"
the firm said in a tweet on Nov. 9.
KRAKEN
Cryptocurrency exchange Kraken said on Nov. 10 that it held about
9,000 FTT tokens on the FTX exchange and was not affected "in any material way".
Kraken also said on Sunday it had frozen the accounts of FTX,
Alameda Research and their executives.
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