As FTX looks to convince market participants to get on board with its proposal to launch crypto-tied derivatives in the US, there’s one unusual group the exchange operator is looking to assuage: American farmers.
FTX president Brett Harrison took to Twitter this weekend to comment on an article published by the Financial Times that highlighted the concerns of some groups in the agricultural industry.
While FTX and its American affiliate FTX.US are known for operating in digital assets, FTX’s proposal could give it the ability to clear a wide range of financial derivatives and engage directly with clients rather than through third parties. The Commodities Futures Trading Commission (CFTC) is currently reviewing the firm’s application, which was the subject of a public roundtable last week.
According to the Financial Times, farmer groups fear that the around-the-clock nature of FTX’s liquidation system would require farmers — which typically hedge their crops with derivatives products — to stay up with the market to top up their positions.
Harrison said that FTX has “no imminent plans to propose physically settling agricultural products under our margin model.”
Harrison added that even if the firm did begin to work with agricultural derivatives, farmers could still rely on third-party futures commission merchants and brokers to hedge — emphasizing FTX’s longstanding point that its proposal offers choice.
“Furthermore, in a hypothetical future in which physically settled commodities trade on FTX US, we could easily match trading schedules for those products with the contracts and spot markets that currently trade,” Harrison added, in response to comments from Nelson Neale of CHS Hedging, a brokerage firm of a US farming cooperative.
