On Monday July 26, Binance, the world’s largest cryptocurrency exchange, said that it will no longer allow cryptocurrency margin trading in the Australian dollar, euro, and pound.
The crypto exchange’s move to delist margin trading pairings for the AUD, EUR, and GBP is thought to be a regulatory response to regulatory criticism in Europe, the United Kingdom, and Australia.
Crypto margin trading is a type of cryptocurrency trading that allows traders to borrow money in order to benefit from current holdings.
The exchange, in particular, allows users to create a position with their own money and the quantity of assets they want to acquire by automatically lending them money for positions that need a position opening based on the maximum available leverage. When a position is closed, the exchange automatically deducts the refund amount as well as other fees.
Binance has announced that margin borrowing for bitcoin, ether, and other major cryptocurrencies, as well as their Australian dollar, euro, and pound pairings, would be suspended as of Aug. 10. On August 12, the platform will cancel any pending orders, settle all open trades automatically, and delist the pairings.
Despite the fact that most cryptocurrency trading is unregulated, Bitcoin and other cryptocurrencies have grown in popularity among ordinary investors during the worldwide epidemic, forcing regulators to tighten their monitoring of trading platforms.
Financial regulators in the United Kingdom, Japan, Italy, and Thailand have all expressed worry about Binance’s illegitimate financial services.
Binance ceased providing stock tokens to its customers earlier this month, after a warning from a German watchdog in April.
Leverage in Future trading limited to 20x
Changpeng Zhao, the platform’s CEO, recently announced in a tweet on Sunday that new customers’ maximum leverage for trading bitcoin futures will be limited to 20 times their initial investment, down from 100.
This happened after FTX, a Hong Kong-based crypto exchange, reduced leverage to 20 times in order to reduce market volatility with Bitcoin and other cryptocurrencies.
Margin trading has a high level of risk, as well as the chance of big gains and losses. Past performance does not guarantee future results. In the case of severe price fluctuation, your whole margin balance may be liquidated, that’s what Binance warns in its risk warning.
Binance started providing margin trading, as well as futures trading, in July 2019. It is notable for having the title of largest crypto derivatives exchange in terms of daily trading volumes.
Conclusion
The Binance cryptocurrency exchange is the market leader in both spot and margin trading. The platform’s high leverage offerings have made it a popular among margin traders, but the high dangers have made it a nightmare for regulators. Several governments have already imposed restrictions on crypto leverage trading, and many more are considering it.
In light of the exchange’s regulatory issues, Binance CEO Changpeng Zhao said that new users’ leverage will be limited to 20X, while current users’ leverage would be extended over the following several weeks.
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Luke Handt is a seasoned cryptocurrency investor and advisor with over 7 years of experience in the blockchain and digital asset space. His passion for crypto began while studying computer science and economics at Stanford University in the early 2010s.
Since 2016, Luke has been an active cryptocurrency trader, strategically investing in major coins as well as up-and-coming altcoins. He is knowledgeable about advanced crypto trading strategies, market analysis, and the nuances of blockchain protocols.
In addition to managing his own crypto portfolio, Luke shares his expertise with others as a crypto writer and analyst for leading finance publications. He enjoys educating retail traders about digital assets and is a sought-after voice at fintech conferences worldwide.
When he's not glued to price charts or researching promising new projects, Luke enjoys surfing, travel, and fine wine. He currently resides in Newport Beach, California where he continues to follow crypto markets closely and connect with other industry leaders.