Cointelegraph Team
Cointelegraph
Binance, the world’s largest cryptocurrency exchange, continues adopting new leverage trading restrictions on its futures platform in a move to expand consumer protection.
After introducing a 20x leverage limit for new users on July 19, Binance Futures is preparing to apply the same limit for existing users soon, Binance CEO Changpeng Zhao announced Sunday.
“We didn't want to make this a thingy,” the CEO said, noting that the new restrictions will be applied “over the next few weeks.”
Effective last Monday, new users with registered Binance Futures accounts of less than 30 days were prohibited from opening positions with leverage exceeding 20x. The new leverage limits will also apply to existing users with registered futures accounts of less than 30 days, according to Binance’s leverage trading page. “Leverage limits for new users will gradually increase only after one month from registration,” Binance noted.
Launched in July 2019, the Binance Futures trading platform initially allowed investors to open leverage positions at a maximum of 20 times, meaning that an investment of $1,000 could be turned into a bet of $20,000. The exchange subsequently increased maximum leverage and margin on Bitcoin (BTC) against Tether (USDT) contracts to 125x in October, noting that highly leveraged trading was introduced using a “sophisticated risk engine and liquidation model.”
“At 125x leverage, a 100 USDT collateral deposit on Binance Futures will allow users to hold 12,500 USDT in BTC,” the firm said at the time.
The latest trading restrictions echo the recent move by FTX, one of the world’s largest cryptocurrency exchanges. The company officially announced a reduction in maximum leverage from 101x to 20x on Sunday. “Again, this will hit a tiny fraction of activity on the platform, and while many users have expressed that they like having the option, very few use it,” FTX founder and CEO Sam Bankman-Fried noted.
The new restrictions came after a Friday article in The New York Times alleged that risky trades offered on FTX and other crypto exchanges like Binance and BitMEX prompted a crypto market crash in May.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.
Recommended Content
Editors’ Picks
Uniswap nears $3 billion in daily trading volume despite Wells notice and fee hike
Uniswap's (UNI) price witnessed a double-fold crash in the past week after it received a Wells notice from the SEC and later due to the general crypto market crash over the weekend. In the past week, UNI has decreased more than 38%.
Arbitrum Price Prediction: 10% losses likely for holders ahead of $107 million worth of cliff token unlocks
Token unlocks are considered bearish catalysts, particularly when recipients are likely to cash in for a quick profit. The event, which adds tokens to the project’s circulating supply without increasing demand, leaves an effective imbalance in favor of supply.
Ethereum recovers from dip as Hong Kong ETH ETF approval sparks whale buying spree
Ethereum's (ETH) price slightly improved on Monday after Hong Kong approved applications for a spot Bitcoin and Ethereum ETF. Whales have also been accumulating ETH after the market dip over the weekend.
Bitcoin price delays pre-halving rally as US and China battle for BTC supremacy ahead of halving
Bitcoin has failed to showcase an enticing pre-halving rally. As the event remains less than a week out, traders and investors remain at the edge of their seats, with thoughts on whether the impact of the fourth cycle will be different than what has been seen before.
Bitcoin: BTC’s rangebound movement leaves traders confused
Bitcoin (BTC) price has been hovering around the $70,000 psychological level for a few weeks, resulting in a rangebound movement. This development could lead to a massive liquidation on either side before a directional move is established.