In a convergence of traditional finance and emerging technology, former FTX.US president Brett Harrison’s startup, Architect Financial Technologies, has obtained approval from the National Futures Association (NFA) to operate as an independent introducing broker. This latest development is seen as a step forward in legitimising crypto derivatives, broadening market possibilities but also induces suspicion as regards the over-penetration of financial institutions into the crypto sector.
Architect Financial Technologies was established with the objective of giving institutional investors access to exchange-traded derivatives, inclusive of crypto derivatives. Consequently, the NFA’s approval is somewhat pivotal to the realisation of the startup’s mission.
The NFA defines an introducing broker as its member entity that accepts or solicits orders for futures contracts, commodity options, retail off-exchange forex contracts, or swaps. Herein lies an element of concern. Such a definition reveals that the introducing broker doesn’t receive customer funds. Therefore, this introduces an additional layer of intermediation, hence, potential risk, between customers and their investment trades.
Brett Harrison believes his company can bridge traditional and crypto derivatives markets, citing this as the primary focus for Architect. He envisions offering trades on various derivatives at exchanges regulated by the United States Commodity Futures Trading Commission with clearing services facilitated via regulated partners. There is no denying that tapping into regulated exchanges offers increased legitimacy and potential stability for this area of cryptocurrency. However, it also brings with it the risk of increased scrutiny, and possibly stifling regulations that could thwart innovation and restrict market potential.
To stir the pot further, Architect is planning on providing access to over 20 international regulated exchanges for qualified customers. This potential global expansion augments the advantages and concerns alike.
In conclusion, as much as this move to integrate traditional derivatives trade with crypto derivatives holds promise, it seems a tightrope walk between leveraging the traditional market strengths and maintaining the decentralisation ethos that underpins cryptocurrency. Only time will reveal whether the benefits outweigh the potential concerns.
Source: Cointelegraph
