1. It's important to split the risk and function of the deregulated exchanges. If Kraken and Bitstamp get hacked and you have funds there that are lost, it's a big financial impact to you. If you trade CME futures that use Kraken as one of a basket of places they use only to set the index value and Kraken gets hacked, it has next to no impact or absolutely no financial impact to you. The potential maximum financial impact to you in the first case is huge, the potential maximum financial impact to you in the second case is tiny. So I would disagree with the line of thinking that says because CME uses unregulated exchanges to get reference prices, they're somehow even in the same risk universe as using unregulated exchanges.
While it's absolutely possible that a large spot exchange could get hacked and lose funds, in practice over multiple hacks over the last few years, the reputable exchanges have made their clients whole. In fact even some of the smaller ones have compensated users for hacks.
Your assumption that just because they are all unregulated they are all in the same risk universe is incorrect.
2. Sorry, only 21 crypto exchanges hacked, and one crypto itself "hacked" (yes, I understand it was a 51% attack and yes, I could go into a long discussion about exactly what that is, I'm not as ignorant on blockchain as you've assume). Versus zero regulated exchanges. How does that change my point exactly?
3. I never even intimated that CME BTC futures prices influence markets and if it does or not has absolutely nothing to do with my point. I'm really confused why you're bringing this up in response to my post pointing out that unregulated crypto exchanges carry a risk premium because they're demonstrably risky compared to CME?
The regulated exchanges you refer to here are CME/ICE BAKKT. Of course they wouldn't be hacked they don't have spot/physical. Why would anyone hack a futures exchange? Your argument is a strawman.
LedgerX? They stopped accepting retail a long time ago. Also, pretty sure they are unregulated too.
And in the same line of thought, what does the 51% on BTC Gold have anything to do with this discussion other than something you can point to? We are not talking about BTC Gold, drop the strawmans.
My point with CME futures prices is that you insinuate that only regulated exchanges are worth trading/reliable counterparties, which is incorrect. CME/BAKKT crypto products could disappear overnight and it wouldn't affect the crypto space/prices at all. A large spot exchange disappearing overnight would.
4. Futures diverge from spot for a number of reasons depending on commodity. My assertion is that they diverge from spot in BTC because there is a very real risk that the platform you have to use in order to take advantage of that arbitrage opportunity is not itself risk free, it is in fact demonstrably very risky. And therefore the divergence in futures prices from spot is not a risk free or even low risk arbitrage opportunity, it is in fact a reflection of the risk that you take on in order to take advantage of that opportunity. I'm certainly open for discussion on what level of risk there is in a given unregulated exchange and if the current premium reflects that risk. Happy to learn from anyone who's willing to discuss that. But I'd advocate that claiming there is no risk, and furthermore claiming that anyone who claims there is risk is doing so from a position of ignorance, isn't terribly helpful in advancing the discussion. Refusing to acknowledge even the possibility of any minuses is more a sign of being caught up in a bit of a cult in my experience.
There are 2 points you are mistaken here on given your assertion:
1)Since CME is a regulated exchange and has no counterparty risk, CME BTC futures shouldn't diverge from spot because the cost of carry is 0 for digital assets. So why do they?
2)Again, you are mistaking futures basis for some notion of "risk premium" of counterparty risk. If you actually knew what you were talking about on this point, you would notice that most of the futures prices on non regulated exchanges are roughly the same. The prices of futures on these exchanges have nothing to do with the counterparty risk.
Also you completely did not address the fact I stated that if an exchange has serious counterparty risk, it will show up in that exchanges spot price for assets. Again, you need to research more.
To sum up, although you may have some knowledge of the space there is much more you need to know. Don't apply traditional asset thinking to digital assets.
