FTX Joins Coinbase, Kraken With US GAAP Audit Pass

Both FTX and FTX.US have completed requirements to pass the US Generally Accepted Accounting Principles (GAAP) audit, which checks for a set of accounting principles, standards, and procedures in accordance with the Financial Accounting Standards Board (FASB). 

FTX CEO and founder Sam Bankman-Fried announced the news via Twitter Friday. 

While this is a first for FTX, Coinbase and Kraken have historically passed US GAAP standards. FTX’s trading model differs from other cryptocurrency exchanges in that it allows for trading of tokenized derivatives.

“It is something that we’ve been working on for a couple of months, and we are really excited about it,” said Brett Harrison, president of FTX.US. “While we might not be the first crypto exchange to do so, we are excited about demonstrating to the crypto world and also to regulators in general that we are serious about transparency.” 

The GAAP comes as regulators around the world have moved to bring further oversight to the cryptocurrency industry. FTX does not see the possibility of greater regulation as a negative, Harrison said. 

“We have been in pretty constant contact with regulators, from a number of different agencies looking to form collaborative and cooperative relationships with them,” he said. “In general, FTX.US, especially is excited about, not just helping to shape the regulatory landscape for crypto, but also to get into other forms of regulated trading activity.” 

Token classification

One of the biggest issues affecting all US exchanges, Harrison explained, is the question of whether or not specific tokens should be classified as securities. Exchanges operating in the US are typically regulated by The Financial Crimes Enforcement Network under the money services business sector. 

“If a token is a security, then you cannot offer an unregistered security for trading to an unaccredited investor,” said Harrison. 

This is the central question in the ongoing Security and Exchange Commision vs Ripple lawsuit, Harrison pointed out. 

“The main subject of the Ripple case right now is trying to determine whether Ripple is actually a security, and we’re watching that closely to see what effect that’s going to have on the industry,” he said. 

FTX is also watching the SEC and Chairman Gary Gensler, who has said he plans on making cryptocurrency regulation a priority, for clarification about the classification of digital assets, Harrison said. 

“One thing that excited us coming out of the debates on the Senate floor is the appetite for education about crypto,” he said. “In our conversations with regulators, we are in general happy with and pleased with how much they know and are educating themselves on the industry and how much they want to work with us to put in fair and tough regulation, but also to allow for continued innovation in the space.”