When it comes to investments, especially in cryptocurrencies, the United States authorities are very strict in protecting investors from risks and losses. For this reason, crypto companies often exclude US residents from their offerings due to strict regulatory policies
Although no laws are banning Americans from using margin trading, the regulations remain unclear. Thus, to avoid breaching any of these rules, exchanges like Binance don’t offer leverage services to users in the US, leaving them with little to no options.
Coinbase Launches Margin Trading
Good news for traders in the US as the country’s leading cryptocurrency exchange, Coinbase has enabled margin trading, and Americans are eligible to use it. The leverage option is available on the Coinbase Pro trading platform.
According to the exchange, customers have been requesting the addition of margin trading to allow them trade cryptos on leverage. Margin is designed for advanced traders, and it will enable them to borrow additional funds for their trading activities.
The new margin trading feature from Coinbase will allow qualified individual and institutional traders to borrow up to 3x what they hold in their wallets. However, this feature is currently only available to customers in some jurisdictions. Individual traders must reside in one of the 23 states in the US. Institutional users, on the other hand, must live within one of the 43 states or nine international countries where the service is available.
This is not the first time Coinbase is launching a margin feature for users in the US. Back in 2017, the exchange added support for leveraging on its GDAX (now Coinbase Pro). However, the firm had to shut down the service that same year after the incident that caused Ether (ETH) price to drop to as low as $0.3 from $300.
Margin Trading: The New Face of Crypto Trading
A lot of cryptocurrency exchanges are now offering margin to their customers to amplify the impacts of their trades. Last year, Binance officially announced the launch of its margin trading platform to allow users to borrow up to 3x. The Binance futures trading platform, on the other hand, has even higher leverage. Other major exchanges like Kraken, BitMex, and Bitfinex are also offering margins with 100x leverage trading.
While Bitcoin margin trading offers higher potential profits, it also comes with significant risks. That’s why it’s advisable to be exercised by advanced traders with sufficient experience.