9 Dec, 2020

Trading Services On Coinbase Pro

Digital currency exchange, Coinbase announced that it will no longer offer margin trading services on Coinbase Pro. The company mentioned that Coinbase Pro will disable New margin trading from 14 PM PT on November 25 due to the recent guidance from the Commodity Futures Trading Commission (CFTC).

According to the official announcement, the Exchange does not currently cancel existing margin positions, but customers are advised to close existing orders by December, as the product will be taken offline once existing margin positions have expired.

Coinbase wants to work closely with regulators in the future to meet the requirements. In addition, the exchange stressed the need for a clear regulatory framework for margin lending products to protect customers in the United States.

In 2017, the San Francisco – based trading platform experienced a flash-crash on margin trading services, and after the crash, the CFTC launched an investigation into it. The exchange restarted its margin trading services in 2020, but it looks like the company will have to wait a few more years to resume margin trading.

“In response to new guidance from the Commodity Futures Trading Commission, we are deactivating our margin trading product. For customers who use credits, all open limit orders will be cancelled at that time. The product will go offline in December when all existing margin positions have expired. We believe that clear and reasonable rules are needed to protect US customers and ensure their safety. We look forward to working closely with regulators to achieve this goal,” Paul Grewal, Coinbase’s Chief Legal Officer, said in a statement.

Margin Trading

The concept of margin trading allows an investor to borrow funds from a third party to trade. The CFTC recently introduced strict rules to protect investors who trade margins from potential losses. Coinbase has taken some initiatives to educate investors on the positive and negative side of margin trading, but it appears that the measures have not been sufficient to meet the CFTC’s regulatory requirements.

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