Coinbase Pro Ends Margin Trading Services Citing Regulatory Concerns


Crypto exchange Coinbase Pro has announced that it would discontinue margin trading services on the platform beginning on Wednesday.

November 25, 2020 | AtoZ MarketsUS-based cryptocurrency exchange Coinbase Pro has informed users about ending its margin trading service due to the guidance from the US Commodity Futures Trading Commission (CFTC).

Coinbase Pro ends margin trading services today

According to the announcement, users will not be able to place new margin positions starting from Wednesday, November 25. The exchange will also close active limit orders. However, the exchange has scheduled a complete shutdown of the service for December.

“We believe clear, robust rules for margin products are essential to protect and maintain peace of mind for American clients. We look forward to working closely with regulators to achieve this goal,” the California-based company said in a statement.

Coinbase first offered margin trading to its users in early 2017 on the GDAX exchange, later renamed Coinbase Pro. In October of the same year, the function was disabled after receiving a request from the CFTC due to the collapse of the Ethereum price, which caused some users to lose funds.

Read also: Binance Margin Trading Service Stands as a Future Option

In February 2020, the exchange relaunched the service on the Coinbase Pro platform.

As AtoZ Markets earlier reported, the Japanese regulator announced limiting margin trading for crypto exchanges from this year. The Financial Services Agency (FSA), Japan’s financial regulator, announced that it intends to reduce the margin leverage of exchanges to twice the trader’s total deposit.

Margin trading can swing trading wins or losses at a significant level. It can also result in a lot of volatility in the market as a little spike in the market can lead to huge gains or losses. It’s even more prevalent when so many investors participate in the practice at the same time.

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