FTX is a relatively young cryptocurrency derivatives platform that has cemented its place in the growing cryptocurrency market. The exchange enjoys the strategic support of Binance, one of the world’s leading cryptocurrency exchanges by trading volume. This in-depth review of FTX provides an overview of the exchange, its product offerings, services, trading fees, and more.
It is worth noting that traders must only use an exchange as a trading platform and not as a digital wallet for their assets. This is because exchanges are prone to hacks or other security breaches as they are constantly targeted by cybercriminals due to the amount of money at their disposal.
FTX Exchange Overview
FTX is a crypto derivatives exchange that offers a traditional platform for beginners, intermediate traders, and professional trading firms. The exchange was founded by its current CEO, Sam Bankman-Fried, in 2018. Bankman-Fried graduated from the Massachusetts Institute of Technology (MIT) in 2014 with a degree in Physics. He began his career at Jane Street Capital and founded Alameda Research – a quantitative trading platform – in 2017.
Alameda Research plays an important role in helping FTX to maintain deep order books and over-the-counter (OTC) services.
The crypto space has changed over the last few years due to the growing regulations in the market. FTX is incorporated in Antigua and Barbuda and has its headquarters in Hong Kong. Hong Kong is a favorable destination for crypto startups due to friendly regulation.
The exchange has restricted its services to United States residents. A separate entity, FTX.US, operates in the U.S. and maintains several licenses.
Crunchbase data shows that FTX raised approximately $16 million in four funding rounds. Some of the exchange’s investors include Binance, Race Capital, Liquid Value Capital, FBG Capital, Galois Capital, and more.
Products and Features
FTX has managed to attract users by providing several advanced trading products at reasonable rates. The exchange was the first to launch unique products such as leverage tokens. This has helped the crypto derivatives trading platform to stand out from its competitors.
Some of the key features of FTX are:
- Fiat currency transfers: the platform allows users to make transfers in leading fiat currencies such as USD, Euro, GBP, and more.
- Up to 101X leverage:
- Institutional grade services
- Extensive customer support
There is a wide range of tradable products on the exchange, ranging from cryptocurrencies to stocks.
The exchange lists futures on Bitcoin and altcoins such as Ether, EOS, stablecoin USDT, Solana, Matic, and more. Each digital asset has three futures:
- A contract that expires in the current quarter,
- A contract the expires in the coming quarter,
- A perpetual future
FTX-listed futures are different from other futures in several ways:
- The futures are settled with stablecoins. Stablecoins are deposited as collateral
- FTX uses a unique backstop liquidity provider program which helps accounts at the cusp of bankruptcy.
- Large price dislocations are avoided using carefully measured margin calls.
Users trade options like futures. An option is a contract in which the holder has the right – but not an obligation – to buy or sell an asset at a specific date. The two basic types of options are calls and puts. Call option simply means the right to buy while the put option is the right to sell.
Spot trading on FTX works similarly to other exchanges. Digital assets bought and sold on the platform are delivered immediately. Some of the popular digital assets listed on the exchange include BTC, ETH, BNB, USDT, LINK, etc.
Prediction markets present markets where the outcome of future events can be traded. FTX prediction markets cover politics (election results) and sporting events.
FTX prediction markets. Source: FTX
Leveraged tokens are ERC20-based assets that give traders leveraged exposure to digital assets, without going through the hassle of managing a leveraged position. They are high-risk financial products since they are prone to gaining or losing large amounts in a single day.
FTX offers tokenized stocks for trading. Tokenized stocks are backed by the shares of the underlying stock. For example, tokenized Tesla stock mimics the price action of Tesla stock. To some people, trading tokenized stocks is the same as trading the actual stock.
Tokenized stock trading is available to users who are KYC 2 on FTX. After this, the traders must submit their KYC information to CM-Equity, a German-based financial institution authorized to offer tokenized stocks. In essence, an FTX user who trades tokenized stock inherently becomes a CM-Equity customer.
How to Open an Account
Opening an account on FTX is a fairly straightforward process that is similar to the registration process on other crypto exchanges.
- Go to FTX’s website and click on register. The registration button is located at the top right of the official home page.
- An email registration pop-up window will appear. Enter your email address and choose a strong password. Click ‘Sign Up’ to register your account.
- You will be required to complete your identity verification before trading or depositing.
The exchange has three KYC levels, and each level determines the functions and features accessible to traders.
The first level, or unverified level, is the lowest possible KYC level. This level allows users to only explore the site. Trading, depositing, or withdrawing is restricted.
KYC tier 1 requirements include name, email, country of residence. Traders can withdraw a maximum of US$2000 daily.
KYC tier 2 level requires full legal name, date of birth, address, ID, and facial recognition. Traders who pass tier 2 verification enjoy unlimited cryptocurrency and fiat withdrawals.
FTX KYC levels. | Source: FTX
Deposits and Withdrawals
Users can buy crypto with a credit card through a party service offered by Simplex. 2FA needs to be enabled before users can buy crypto through Simplex.
Fiat deposits or withdrawals are only reserved for accounts that have obtained tier 2 verification level.
Fiat withdrawals lower than US$10,000 are charged a fee of $75.
There are no fees charged on crypto deposits and withdrawals, except for Ethereum, ERC20 tokens, and tiny amounts of Bitcoin withdrawals. Traders who have staked their FTT tokens can avoid these charges.
Charges and Fees
The exchange has a tiered fee structure for its futures and spot markets. See the chart below:
Spot trades incur fees in the currency that the trader is receiving. A leverage of 50x results in trading fees rising by 0.02%, while a leverage of 100x or more triggers the trading fee to increase by 0.03%.
Futures settlement incur zero fees.
FTX Token (FTT)
FTX is keeping up with the trends in the crypto sphere by launching its own native token, FTT. The ERC20-based token allows holders to enjoy benefits such as lower trading fees on FTX exchange and socialized gains.
The token started trading on exchanges in August 2019 and is now one of the top 50 cryptocurrencies by market capitalization. In a way, the token is partly tied to the success or failure of FTX.
Is FTX Exchange Safe?
Cryptocurrency exchanges are under threat from cybercriminals who are targeting to drain money from these marketplaces. It must also be noted that the safety of an exchange depends on the transparency of the team behind it, its liquidity, and relationship with regulators.
FTX seems to be liquid and adheres to regulations imposed on crypto exchanges. This gives traders a sense of security as they know that their digital assets are in the right hands.
However, it must be noted that there is no crypto exchange that is truly safe. Traders must store cryptocurrencies they don’t intend to trade on personal hardware wallets. Only crypto meant for trading should be held on the exchange’s wallets.
FTX is an innovative cryptocurrency derivatives marketplace. The exchange has launched its own utility token – FTT – to fuel the ecosystem. The young exchange enhanced its credibility by attracting $16 million in funding from notable investors such as Binance exchange.
This detailed review of FTX exchange focused on account creation and verification, trading fees, tradable assets, FTT token, deposits and withdrawals, and KYC/AML.
FTX seems to be a safe exchange to use. The exchange has raised funds from notable investors and has high liquidity for traders to withdraw their assets. In terms of breaches, no exchange can be completely secure.
U.S. residents are not allowed on FTX.com. However, they can open accounts on FTX.US.
FTX and its U.S. subsidiary launched a marketplace for launching non-fungible tokens (NFTs).
Unverified FTX users can only explore the site. To truly unlock all the features offered by the exchange, traders must complete tier 2 verification.
You can trade tokenized stocks on FTX. This feature is open to traders who have completely verified their accounts on the platform.
FTX was founded by Sam Bank-man Fried.
FTX.US is the sponsor of the NBA team Miami HEAT. As part of the deal, Miami HEAT’s home will be called FTX Arena.