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Coinbase Pro Ends Margin Trading, Citing CFTC Guidance

  • Cryptocurrency exchange Coinbase Pro ends margin trading services.
  • CFTC has delivered strict regulations.
  • Moreover, it is unclear about the impact the move will have on markets.

US-based cryptocurrency exchange Coinbase Pro announced that there will be no new margin trades, citing guidance from the Commodity Futures Trading Commission (CFTC).

Coinbase Pro Ends Margin Trading Services

Coinbase Pro will end new margin trades starting from November 25, 2:00 pm (PT). Moreover, as per the official announcement, the customers advised closing existing orders by December. However, products will take offline after the expiration of existing margin positions.

Coinbase Pro Chief Legal Officer Paul Grewal added,

We believe clear, common sense regulations for margin lending products are needed to protect and provide peace of mind to U.S customers…We look forward to working closely with regulators to achieve this goal.

Recently, CFTC has delivered strict regulations. The regulation is to protect investors from potential margin trading losses. Moreover, margin trading enables an investor to collect funds from a third party to trade.

Coinbase Pro provides its margin trading experience on the platform. Additionally, users can place a buy or sell for any USD margin books on Coinbase Pro. Placing an order using margin opens a US dollar loan.

However, the exchange will not have any control over crypto used for margin trading once it has been delivered to the customer. Moreover, it is unclear about the impact the move will have on markets. More so, some experts suggest it may cool down the recent price run.

Furthermore, Coinbase Pro is one of the most popular cryptocurrency trading platforms. Adding on, it is a highly secure platform with many verification processes in place to protect user accounts. According to CoinGecko, the exchange’s 24 hours trading volume is at $2.22 billion.

Coinbase Pro Trading Volume 1-Month (Source: CoinGecko)
Coinbase Pro Trading Volume 1-Month (Source: CoinGecko)

In addition, Coinbase also took some initiatives to educate investors about the advantages and disadvantages of margin trading. Moreover, it seems like the steps were not enough to comply with the regulatory requirements of CFTC.

Read More: Coinbase Exchange Review 2020 – Details, Trading Fees & Features

Ananthi Reeta

Crypto trading has enticed Ananthi to write for CoinQuora. She has made it her personal mission to teach people about cryptocurrency and to simplify the terms for non-geeks to understand with ease.

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