Due to the „new guidelines from the Commodity Futures Trading Commission“, Coinbase Pro suspended margin trading
The US exchange Coinbase Pro has announced that, as of today, clients will no longer be able to use the platform’s margin trading functions.
Paul Grewal, Chief Legal Officer of Coinbase, said that as of 11:00 CET on 25 November, no new margin trades can be opened. The product will be completely removed in December, „once all existing margin positions have expired“.
Grewal explained the reasons for this choice:
„We believe there is a need for clear, common sense rules for margin lending products to protect US clients and provide them with greater peace of mind.
We will work closely with regulators to achieve this“.
Margin trading was removed in response to „new guidelines from the Commodity Futures Trading Commission“: in March, the CFTC clarified its position on „actual delivery“ of assets, including cryptocurrency purchased using leveraged trading. The CFTC has set a 28-day limit for physical delivery: at the end of this period, buyers will be free to use the assets thus obtained.
In traditional futures markets, users bet on the future value of a particular asset. If they hold those futures until the end of the contract, the asset in question is physically delivered to them. However, CFTC guidelines clarify that for digital assets, parties selling tokens and facilitating the trade (such as Coinbase) would have no control over the cryptocurrency Bitcoin Up used for margin trading once delivered to the client.
It is not clear what impact this decision will have on the markets, but some experts believe it could slow price growth:
„Because of the new CFTC guidelines, Coinbase Pro is removing margin trading.
This is a major blow to cryptocurrency in the US, it will probably have an impact on prices because it will remove a lot of money from the market.
I wonder how long it will take before other US exchanges are forced to comply as well“.