Coinbase Pro Disables Margin Trading Citing Regulatory Concerns; DeFi’s Time to Shine?
Coinbase Pro will stop offering margin trading services to its customers with effect from 2 pm PT on November 25, 2020. The firm says the move is part of plans to function in accordance with the statutes of the Commodity Futures Trading Commission (CFTC), according to a press release on November 24, 2020.
Coinbase Pro Ends Margin Trading
Coinbase Pro, a bitcoin trading venue dedicated to servicing professional cryptocurrency traders, has stopped offering margin trading services to its clients. The firm has made it clear that the move is in response to the guidance of the CFTC.
As stated in its press release, customers will no longer be able to place margin trading orders starting from 2 pm PT on November 25, 2020, and all open limit orders for traders using credit will also be canceled by that time.
And in December, the feature will completely be removed from the Coinbase Pro platform, as all existing margin trading positions must have expired by that time.
The firm wrote:
“In response to new guidance from the Commodity Futures Trading Commission, we are disabling our margin trading product. We believe clear, common-sense regulations for margin lending products are needed to protect and provide peace of mind to U.S. customers. We look forward to working closely with regulators to achieve this goal.”
Margin Traders to Flock to DeFi Platforms?
Interestingly, some observers have hinted that the new CFTC directive, which requires the actual delivery of margin assets to be done within 28 days, coupled with the fact that the regulator strongly takes the stance of “not your keys, not your crypto,’ will make life unbearable for centralized exchanges.
Per a Twitter thread by Kyle Joseph Kistner of the bZx DeFi platform, the latest development may trigger a massive boom for the fledgling DeFi sector, as only non-custodial platforms will now be able to offer margin trading products. He declared:
Despite the numerous hacks, heists, and bugs that have befallen a good number of DeFi platforms in recent times, the ecosystem continues to expand, as more and more brave investors join the DeFi craze.
At press time, the total value locked in DeFi protocols sits at $14.23 billion, with Maker, WBTC, and Compound occupying the top three spots in the ecosystem respectively, as seen on DeFiPulse.