At CFTC panel, CME exec slams FTX proposal by drawing comparison to Terra's collapse

The opposition by CME to FTX’s proposal for margin disintermediation continues to play out in the public eye. 

The Commodity Futures Trading Commission is hosting a roundtable discussion on Wednesday related to crypto exchange FTX’s proposal to disintermediate derivatives trading. 

Among 31 panelists in attendance is Sean Downey, an executive director at CME, the leading source of derivatives trading in the US today. 

Downey criticized FTX’s proposal as based on several assumptions, saying that “one is essentially that an algorithm can replace capital.” 


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“I want to clarify that margin and capital are two completely different things,” Downey said. “We’ve seen that movie before. In fact, we’ve seen that movie very recently, with the algorithmic stablecoin Terra.”

Terra’s collapse has become a key talking point for a wide range of criticisms of crypto actors. 

Two weeks ago, CME’s CEO unloaded on FTX as well, during a hearing before a Congressional committee. As the largest derivatives market by dollar value in the US, CME is the most notable market incumbent to defend futures commission merchants, the primary intermediary that FTX's proposal would potentially threaten.

In his own remarks today, Sam Bankman-Fried, the CEO of FTX, downplayed the radical nature of the current proposal. “The core feature of it, I would say, is that the risk, the risk model and the collateral are all at the central party,” he said.

Photo by Kollen Post for The Block

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Kollen Post is a senior reporter at The Block, covering all things policy and geopolitics from Washington, DC. That includes legislation and regulation, securities law and money laundering, cyber warfare, corruption, CBDCs, and blockchain’s role in the developing world. He speaks Russian and Arabic. You can send him leads at [email protected].