Are Digital Assets Up to Speed for Institutional Trading?

In the mid-2010s, before founding the FTX cryptocurrency exchange, Sam Bankman-Fried and some of his associates worked at Jane Street Capital. The highly quantitative firm’s algorithmic trading and risk management systems presumably informed their vision for FTX.

Bankman-Fried concluded that existing crypto exchanges “were not terrifically resilient, not great at risk reduction,” Mark Wetjen, formerly of the Commodity Futures Trading Commission, who had joined FTX US as head of policy and regulatory strategy, recounted during a panel discussion at Washington’s American Enterprise Institute on October 4, 2022. FTX engineers set out to build from scratch an exchange that could “bridge traditional finance with digital-asset finance, bring the best of each together.”

That work was apparently still in progress a week later when Bankman-Fried tweeted about an upgrade planned for November 21, 2022: “a whole new order matcher, lower latency API pathways, a whole slew of other features.” It was an answer to “complaints from users [about] the high latency and low throughput of the platform’s matching engine,” as The Block noted in its...