Ex-FTX US chief bets on ‘perps’ for traditional markets
News Summary
Former FTX US President Brett Harrison is launching Architect Financial Technologies, a new venture aiming to introduce crypto's popular perpetual futures contracts into traditional finance. The startup has secured approval in Bermuda to offer perpetual futures contracts, or “perps,” tied to conventional assets such as stocks, indexes, commodities, foreign currencies, and interest rates. Perps allow traders to take leveraged long or short positions without an expiry date, using a funding rate mechanism to align prices with spot markets. Despite driving explosive growth in crypto (monthly trading volumes hit $6.4 trillion in 2025), perps are considered high-risk derivatives. The US Commodity Futures Trading Commission (CFTC) warned in 2023 about inadequate safeguards and settlement practices. While Harrison's FTX US operated as a separate, regulated entity and did not offer such products, both FTX entities collapsed in November 2022 following a severe liquidity crisis.
Background
Brett Harrison previously served as President of FTX US, a regulated entity of FTX. Both FTX and FTX US collapsed and filed for bankruptcy in November 2022 due to a severe liquidity crisis, sending shockwaves through the crypto market. Perpetual futures, or "perps," are a type of derivative originated in crypto markets that allow traders to hedge or speculate on asset prices with leverage and no expiry date, maintained by a funding rate mechanism that ties them to spot prices. These contracts have gained significant popularity in crypto but are considered high-risk, especially due to their leveraged nature, and have drawn scrutiny and warnings from regulators, including the U.S. Commodity Futures Trading Commission (CFTC).
In-Depth AI Insights
What are the core strategic motivations for introducing crypto-native perpetual futures into traditional financial markets, especially given the recent history of FTX? - Despite FTX's collapse exposing the extreme risks of perpetuals, the immense trading volumes and liquidity they generated in crypto ($6.4 trillion monthly by 2025) indicate significant market demand and profit potential. - Harrison's new venture likely aims to de-risk these offerings by operating under a regulated structure, targeting institutional investors seeking high-leverage, no-expiry trading instruments currently absent in traditional markets. - This move also represents a continued push for crypto-native financial innovations to penetrate traditional finance, attempting to repackage high-demand products within stricter regulatory frameworks. How are regulators likely to respond to this attempt to introduce high-risk crypto derivatives into traditional markets? - Given the high-risk nature of perpetuals and the CFTC's 2023 warnings, U.S. and global regulators are expected to maintain high scrutiny, likely imposing far stricter approval and operational requirements than Bermuda. - Regulators will focus on investor protection, market manipulation risks, clearing mechanisms, leverage limits, and compatibility with existing traditional financial regulations, potentially requiring clearer legislation in the U.S. - Approval in Bermuda might encourage other less-regulated jurisdictions to follow suit, raising concerns about "regulatory arbitrage" and potentially prompting major economic powers to accelerate their own policy development. For investors, what are the potential implications and risks for traditional financial markets from this development? - Potential Implications: If successful, it could introduce new liquidity and trading strategies, altering pricing and volatility dynamics in traditional assets, and offering new hedging and speculative tools for institutions seeking high-risk/high-reward exposure. - Primary Risks: The inherent high leverage of perpetuals could amplify systemic risks in traditional markets, particularly during periods of extreme volatility. The FTX lesson demonstrates that managing the risks of such products is highly challenging, even for sophisticated participants. Furthermore, regulatory uncertainty could lead to sudden policy shifts, impacting product availability and market stability.