Binance Stops Crypto Margin Trading For Euro, Pound, And Aussie Dollar
As regulatory clampdown on Binance continues, the leading exchange has announced that it no longer supports trading on some base currencies. In an official press release, the world’s foremost crypto exchange, Binance, today announced that it would cease to allow margin trade pairs on three fiat currencies (the British Pound Sterling (GBP), Australian Dollar (AUD), and the Euro (EUR)).
Binance revealed that this action would become effective starting from August 10, 2021. Any pending orders as of that day will be canceled or settled automatically. Then, by August 12, 2021, the exchange will stop any isolated trading involving these currencies.
Binance delisting announcement. Source: Twitter
Binance’s New Trading Order
Binance‘s new trading action aligns with its recently announced goals of limiting leverage trading and reducing trading risks to the barest minimum. Part of the release remarked that “there is a significant risk associated with margin trading; profits or losses can be huge. Also, previous successes cannot guarantee any future success. Extreme price action can wipe away all your margin balance.”
Crypto traders that engage in crypto margin trading borrow funds from exchanges to have a larger trading capital when leveraging trading positions. Binance’s margin trading and futures trading were launched on the same date – July 2019. The exchange has an automated process that allows traders to borrow funds they’ll need to open a position as determined by their maximum applicable leverage.
However, the traders can’t access these funds till after they’ve opened a position with their funds and the quantity of assets they intend to purchase. Traders pay back such borrowed funds the instant they close their trading position. The exchange deducts the loan amount when deducting other charges.
During the heat of the COVID-19 pandemic, there was a significant rise in the popularity of crypto-related activities, including retail investors. More people learned and started trading cryptocurrencies than ever before during this period. Hence, regulators decided to examine crypto platforms more closely since they are yet to regulate the crypto industry itself.
Increased Regulatory Pressure Causes New Binance Action
Binance’s delisting of the fiat currencies mentioned above might not be unconnected with the recent sanctions it faces from various regulatory agencies from different parts of the world. Countries such as Italy, the United States, Japan, Thailand, and United Kingdom have issued stern warnings to this leading exchange.
Also, top financial institutions in the United Kingdom, notably, NatWest and Barclays banks, have stopped allowing Binance-related transactions since the end of last month. Binance ceased to sell its stock tokens earlier this month after receiving a warning notice from the German security regulatory body.
Yesterday, Changpeng Zhao, Binance CEO, confirmed on Twitter that the maximum leverage for new crypto futures traders has reduced from 100 to 20. Similarly, Hong-Kong-based crypto exchange, FTX, also announced the same reduction in leverage as Binance. Its reason was to reduce the Bitcoin speculative trading among traders.
Regardless, the signs remain bullish in the cryptocurrency market. Bitcoin is surging towards a $40K price, and altcoins are gearing up to follow.
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