Humiliated ‘crypto bros’ don blazer for Boca Raton

The new owners of The Boca Raton hotel recently spent $200 million to modernize the luxury South Florida resort. But as many derivatives experts gathered this week at the Futures Industry Association’s annual conference, walking through the beach club felt like stepping back in time.

Rostin Behnam, chairman of the Commodity Futures Trading Commission, summed up the mood when speaking to reporters: “This conference room was filled with new players a year ago – and now it feels like it’s back to where it was. it was a few years ago.”

Last year, FTX CEO Sam Bankman-Fried – famous for speaking to executives and world leaders in a t-shirt and shorts – spearheaded the crypto industry takeover of the event, promising to do away with the traders’ club community. , brokers and stock exchange operators who have been meeting in Boca for almost 50 years.

A year later, as Bankman-Fried faced a dozen federal charges for alleged fraud and markets reacted to the collapse of crypto-centric banks Silvergate and Signature, digital asset evangelists were few and far between in Boca. And the few who remained were smart.

“You won’t see as many black shirts this year,” said FIA president Walt Lukken.

“Even crypto people are in blazers,” added an FIA executive.

However, the renewed formality reflects more than a mere radical change. Unlike FTX’s attempt to rip up and rebuild the established financial order, crypto-companies are now trying to make their businesses more similar to their older competitors.

“They’re not dead, I’m seeing them — some of them are coming our way more and more,” said Gerry Corcoran, CEO of 104-year-old brokerage firm RJ O’Brien. “Now they want to play by our rules, not in-between.”

FTX proposed replacing brokers like RJ O’Brien — known as futures commission merchants, or FCMs — with an algorithmic system that would have automatically liquidated investors’ positions if margin levels fell too low. Now, however, crypto brokers Coinbase and Robinhood are trying to become FCMs themselves.

Despite the many crises of the past year, the majority of Boca executives suggested this week that cryptocurrencies still have a future as an important part of financial markets. “I’m a big fan of blockchain,” said CME Group CEO Terry Duffy, who clashed with Bankman-Fried at the previous conference. He added: “the structure of the market is changing” as a result of ledger technology.

An executive at another major exchange highlighted that government and central bank officials remain eager to create their own digital currencies. Another added that traditional post-trade systems are likely to become more efficient by “embedding blockchain.” The European Central Bank is among the institutions currently investigating the use of blockchain technologies to underpin market infrastructure.

Executives from Coinbase — one of the few crypto sponsors still at Boca — showed they’re willing to join in on a few jokes by taking part in a panel on rebuilding the crypto industry wryly dubbed “back to business.” Chief Institutional Strategist John D’Agostino gushed about his love for banks and urged all bankers to call him.

However, the humor once again reflected a more significant issue for many in the crypto industry. After the collapse of Silvergate and Signature, many digital asset companies did not need to acquire new banking providers. Their reduction particularly hindered round-the-clock payment.

Some of the incumbents previously fired by young crypto companies believe that the recent disruption will cause a “flight to quality,” making it easier for them to get business from investors wary of crypto-native businesses.

“If you [a company like] Goldman Sachs, who do you want to lead crypto businesses in the US? asked the head of one of the market clerks. “These are not crypto-native companies. Larger institutions see this as a moment.”

The stock exchange operator, Cboe Group, for example, increased its presence at Boca this year, sponsoring several events and with the participation of a fleet of executives.

But some attendees criticized the event’s organizers, the FIA ​​and CFTC regulators, for always taking hyped promises from groups like FTX seriously. Boca is usually the biggest event on the industry calendar, but one executive at a major traditional exchange said he skipped last year’s event because of an influx of so-called “crypto bros.”

CME’s Duffy said FTX’s plans would have “blown up the markets” and that Bankman-Fried’s 2022 appearance was nothing more than a hoarding of funding “to cover up the fraud it perpetuates.”

Still, even those who welcomed the return to normality were happy to learn from the brief disruption. The head of one proprietary trading firm said the crypto influx had “got everyone thinking”, prompting more serious debate on topics such as the introduction of 24/7 trading in traditional asset classes.

“What crypto was good at was pushing the envelope,” said one executive at a traditional exchange, noting that the conversation around 24-hour equity trading has picked up since established names saw demand in crypto markets. Late last year, the CBOE extended trading hours for two additional options products to “allow traders to adjust positions around the clock.”

According to FIA boss Lukken, it is “understandable” that the profession has retreated to more conventional models, but he is happy to retain some of the lessons. “I gave up ties last year,” he pointed out. “I didn’t go back.”