March 25, 2019, | AtoZ Markets - The giant cryptocurrency exchange Binance, is reportedly preparing to onboard a margin trading system on its platform, which is said to have a riskier impact on trading digital assets more than it already has, report media outlets.
Binance will allow its retail customers to trade on the margin, and what stirs an atmosphere of touched dissatisfaction among the crypto community is that investors will be given the opportunity to trade on borrowed funds, where the coin held is regarded as a guarantee for the issuer, which means the transaction is subject to a greater risk.
Among the details of the news, which has not been confirmed yet, is that using the margin feature will be conditional on holding the Binance Coin [BNB] - the native token of the exchange.
Earlier last week, a programmer on Reddit had discovered the margin trading feature on the Binance’s Application Programming Interface [API]. That “new” discovery made the cryptocurrency community believe that the exchange is will schedule margin trading within its next update.
“This change has not been reflected on the documentation. Further analysis of the response revealed that all 482 trading pairs have spot trading enabled and margin trading disabled; which makes sense. However, this API update implies that Binance is considering the implementation of margin trading features.”, said the programmer.
Margin trading may come anytime in the future!
On his turn, the CEO of Binance Changpeng Zhao clarified that the exchange had not included the margin trading on its platform yet, while the idea may still stand for future application.
“We future proof our API framework as part of our system upgrades. No dates.”, said Changpeng.
From a customer-protection perspective, regulators have always referred to that margin trading increases the risk of investment, in addition to the high risk the volatile important assets like cryptocurrencies already pose, where the SEC stressed earlier that “The downside to using margin is that if the stock price decreases, substantial losses can mount quickly.”
It is worth mentioning that cryptocurrency exchanges tend to boost the options its investors have in margin trading, as an attraction factor, for which exchanges compete.