“We didn’t want to make this a thingy,” . This was what Binance CEO Changpeng Zhao posted Monday on Twitter. And that was a week after making the change. Binance, the is world’s largest crypto exchange by trading volume, as you know. The CEO said that it is decreasing the maximum leverage users can use to trade futures contracts. He announced this a day after derivatives exchange FTX announced the same change. These moves probably planned to help to keep away the worst of a coming regulatory storm.
- This fresh limit is 20 times leverage, the exchange’s founder and CEO Changpeng Zhao said in a tweet Monday. It is down from 100 times.
- Binance forced the limit on new users on July 19. And also they will slowly increase the move to all users, Zhao said.
- FTX CEO Sam Bankman-Fried announced something similar too. A similar change that is happening right now on his platform in a tweet posted on Sunday.
- Zhao didn’t say anything about the reason behind this decision. However he said that upcoming changes for existing users were “in the interest of consumer protection.”
- There wan a criticized article about high-leverage trading in crypto as risky on July 23 New York Times. The article suggested
regulatory that is about to happen, moves opposed to high leverage margin trading, citing Timothy Massad, a former U.S. Securities and Exchange Commission chairman.
- Binance’s Zhao affirmed that “volatility is amplified by the leverage,” . That was according to the New York Times article.
- Also, in addition, Bankman-Fried said in his Twitter thread announcing FTX’s change that high leverage is a small part of positions. That is not a big share to volatility. And also that many arguments against it “miss the mark.”
- Exchanges are probably worried about the regulatory screws making stronger on margin trading. Huobi suspended the service to Chinese users in June.
Binance decided to stop its crypto edge trading containing sterling, the euro and Australian dollar. While the world’s large cryptocurrency exchange looks to stand off a extensive regulatory backlash in opposition to some of its services.