Coinbase will suspend all leveraged transactions tomorrow based on the CFTC guidelines. The crypto exchange Coinbase plans to end all marginal trading due to the latest regulations of the Commodity Futures Trading Commission (CFTC).
The San Francisco-based trading platform announced on Thursday that it will prevent customers from trading new margins from 01:00 UTC. Coinbase will completely end its margin trading feature next month when the current positions expire.
When clients trade on margin, they actively borrow money from the exchange or broker to cover the cost of investing in an asset such as a security or cryptocurrency. This allows traders to raise their positions, thus increasing their profits or losses. The exchange pointed to the CFTC’s “final guide”, citing the Commission’s March report on the “actual delivery” of digital assets as the reason for this decision, but did not specify which aspect of the guide caused the action.
This guide, rooted in the 2016 sanctions action against Bitfinex, aimed to provide guidelines on situations where a customer can be said to have legal control of a cryptocurrency. According to the guidance, assets purchased through leverage or collateral contracts cannot be liquidated.