Cryptocurrency exchange Coinbase is banning its margin trading products to comply with new rules set by the Commodity Futures Trading Commission (CFTC).
CFTC rules affecting margin trading products
Paul Grewal, Coinbase’s Chief Legal Officer, explained in a blog post on Tuesday:
In response to the new guidance of the Commodity Futures Trading Commission, we are banning our margin trading products.
Starting from November 25 (Wednesday) at 2 pm Pacific time, customers who currently use Coinbase margin trading will not be able to conduct new margin trading, and all open limit orders will be cancelled. Grewal explained in detail. “Once all existing margin positions expire, the product will go offline in December.”
The chief legal officer further explained that Coinbase believes that “clear and common-sense margin loan product regulations are needed to protect” American customers, adding that the company “looks forward to working closely with regulators to achieve this goal.”
Coinbase began to provide margin trading for customers a few years ago, but after the CFTC investigated it after the Ethereum flash crash, Coinbase stopped the service. However, the company launched margin trading on its Coinbase Pro this year for customers living in 23 US states, with detailed information on its website.
Although Coinbase did not specify the specific CFTC rules to follow, the derivatives regulator issued the “Final Interpretive Guidelines for the Actual Delivery of Digital Assets” in March. The CFTC used similar rules in its enforcement actions against Bitfinex in 2016.
On social media, cryptocurrency users are concerned that other exchanges may follow Coinbase and disable its margin trading products. Investor Adam Cochran (Adam Cochran) said: “For U.S. cryptocurrency, this will be a huge blow, and may lead to price increases, because it will cause a lot of capital loss. I want to know that other US exchanges are forced to How long to comply.”
Do you think other exchanges will also stop providing margin trading to American users? Let us know in the comments section below.
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