It’s No 100x, But It’ll Do: Coinbase Pro Re-Releases 3x Leverage

Published at: Feb. 12, 2020

Coinbase Pro, the cryptocurrency trading platform arm of U.S.-based exchange Coinbase, has unveiled 3x margin trading for select customers. 

“Our leverage multiple is based on market analysis,” a Coinbase spokesperson told Cointelegraph in an email. “We are rolling this out in a way that we feel is responsible to our customers while offering them an adequate amount of leverage to trade on.”

Active Coinbase Pro users in 23 states can now trade with leverage on Coinbase Pro, according to the company’s blog announcement on Feb. 12. 

Coinbase Pro hosts a modest 3x leverage limit, whereas exchanges such as BitMEX and Binance offer 100x leverage and up. “We will monitor the market and customer usage and plan to evaluate the feature on an ongoing bases,” the Coinbase spokesperson said, responding to a question on the firm’s potential future plans.”

What is margin trading?

A product typically seen in professional asset trading circles, margin trading essentially involves borrowing funds with which to trade on a per-trade basis. 

Coinbase said its Pro exchange now hosts 3x leverage, so users with one Bitcoin (BTC) can enter trades with three Bitcoin (two borrowed BTC), resulting in amplified gains or losses, depending on the trade. 

Who can use Margin?

Coinbase noted the feature is open for retail and institutional players. The exchange has restricted retail participation to residents of 23 states. Retail customers also must have account records showing regular activity on the platform to qualify for margin. 

On the institutional side, margin availability exists in 43 states and nine other countries. 

Why did Coinbase Pro remove margin years ago? 

Rebranded from GDAX to Coinbase Pro in 2018, Coinbase’s trading platform touted 3x margin trading capabilities for Bitcoin, Litecoin and Ethereum back in 2017, as shown in a how-to tweet from the company.

The platform removed the feature, however, in the months following an Ethereum flash crash in June 2017, which dropped the asset from $317 down to $0.10 in an instant. The Commodity Futures Trading Commission, or CFTC, also investigated the trading platform following the crash. 

When asked why the exchange removed the option, the Coinbase spokesperson said:

“Several years ago, we had a different margin offering that we ultimately decided to sunset because it wasn’t the right experience. Since then, we’ve thought through the experience from first principles and built what we believe to be an exceptional user experience that’s robust enough to scale to the largest institutional users while simultaneously offering an great experience to retail users.” 

UPDATE Feb. 12, 21:54 UTC: This article has been updated with comments Cointelegraph received from Coinbase after initial publication.

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