San Francisco-based cryptocurrency exchange Coinbase has announced margin trading for Coinbase Pro customers but only those that are eligible for it, announced the exchange on Wednesday.
Starting yesterday, Coinbase Pro customers in 23 US states — covering FL, TX, IL, NJ, VA, GA, AR, AK, OR, CT, NH, MA, NE, NC, OK, CO, KS, ME, SC, UT, WI, WY, and WV — can access up to 3x leverage on USD paired crypto assets.
Coinbase has been among a few of the exchanges that did not offer margin. But it has taken the step again after trying it in 2017 on ETH trading that resulted in the crypto asset tanking and Coinbase not going forward with the service.
In the crypto space, where Binance offers eye-popping 125x leverage, outdoing BitMEX’s 100x, Coinbase has joined the ranks of Bitfinex and Kraken that offers leverage of up to 5x.
This move trader Scott Melker said is a “very smart and conservative” one. Those that have a Coinbase account and don’t know where else to trade will be using this service, he said.
Are you eligible for margin trading on Coinbase?
Coinbase caters to both retailers and institutional traders and has the eligibility criteria for both. However, while institutional customers just need to be based in one of the 43 states or 9 international countries where Coinbase offers its service can access margin trading, individual traders have a lot more criteria to checkmark.
To access margin trading, individuals must live within one of the 23 approved states and have a Coinbase Pro account. Moreover, they must be active on Coinbase Pro which is measured by recent trades, balances, and deposit and withdrawal activity.
Additional requirements may also apply which isn’t limited to having enough collateral assets in the Coinbase Pro Account which will be used to margin trade.
Margin trading has been one of its most requested features, said the exchange but issues caution that “Margin trading is risky and may not be suitable for everyone. The value of digital assets may fluctuate and, as a result, you may lose more than your original investment.”
With margin trading, one gets to borrow additional funds from the exchange instead of depositing their own additional capital and amplifying the impact of the trades.
Some like trader Jonny Moe weren’t impressed by this move as “they’re limiting it to $10,000 in buying power. On 3x that’s barely over $3,000 in initial capital. Yikes. (…) it’s long only. More YIKES! Gives a whole new meaning to the term, “buying power”.”
He added: “This is as close as I’ve seen a US exchange get to the classic Asian exchange “JOIN OUR TRADING COMPETITION!!!”
Meanwhile, the exchange is planning to further expand this service to customers located in other regions over the next year.