Red tape for Coinbase – Clearly, margin trading is Crypto Code causing problems for the Coinbase trading platform. It has just announced the termination of this service, obviously due to a new regulatory framework in the US.
No more margin trading from 25 November
Margin trading allows you to borrow a multiple (x2, x3, x50, …) of your actual contribution to create leverage. This can either increase the gains tenfold or cause the entire contribution to be lost more quickly if the trade does not go in the right direction.
Via a publication on their blog, the teams at Coinbase Pro – the version dedicated to Coinbase professionals – have just announced the imminent cessation of the margin trading service.
As a result, it will no longer be possible to open new margin transactions as of this Thursday 25 November at 23:00 (Paris time).
Clients who have taken out a loan to create a limit order will have their limit order cancelled. For positions already opened, the service will only be permanently offline in December, once all positions have expired (loans have a 25-day duration).
US regulatory history too unclear
According to Paul Grewal, Coinbase’s General Counsel (CLO), the sudden shutdown of the margin trading service was due to „new directions“ from the Commodity Futures Trading Commission (CFTC), one of the main financial regulators in the United States.
„We believe that clear and common sense regulation of margin lending products is necessary to protect and reassure US clients. We look forward to working closely with regulators to achieve this goal. »
Coinbase is having a hard time with the US administrations, since yesterday it was because of the IRS (the US tax authorities) that the crypto stock exchange also had to stop one of its services.
According to CoinDesk, if Coinbase stopped sending a tax form that made it easier for its US clients to declare their profits, it’s because the IRS seems to wrongly think that traders have under-declared their earnings. Another form (IRS Form 1099-MISC) will be used instead, in the hope that it will not create new problems.
Although the regulations governing cryptosurveillance have evolved (slowly), they still pose problems for companies in the cryptosphere. This is the last straw since, apart from that, everything is going very well for Coinbase, which has just revealed that it has reached the 20 billion crypto-actives under management. Otherwise, for investors who are keen on margin trading, there will always be the FTX platform to console themselves.