Binance, Despite Recent Setback, Becomes The Latest Major Exchange To Offer Margin Trading

Just a couple of week back BitcoinExchangeGuide had reported about the increasing number of cryptocurrency exchange adding the margin trading feature. The latest trends in the crypto realm is margin trading and initial exchange offerings.

One particularly popular exchange is Bibox, which is known for offering leverage of up to 3x on BTC. Another platform that is following a similar trend is FTX. The highest leverage providers, BitMEX and PrimeXBT, both increasing their trading volume and new user numbers

Now, even Binance joins these exchanges.

We were getting hints of this happening for a while now. The Block had reported about it as far as 2 months back. Now, they are ironing out potential bugs. Their CEO, in the recently held AMA even said that the platform will have a “gradual” role.

Margin trading is trading with borrowed money. In U.S. equities, a broker offers a client the ability to trade on margin in order to increase their buying power. Still, it comes with risk. The downside to using margin is that if the stock price decreases, substantial losses can mount quickly. The losses can be more than what you originally invested due to the leverage applied.

In U.S. equities, rules around margin trading are well established to protect consumers from the risks associated with it. Brokers have their own rules and standards on top of those set forth by agencies such as FINRA, which requires a trader to deposit a minimum margin amount. These risks are amplified with cryptos.

Most people are happy about Binance’s decision to start margin trading. Many of them are even ready to help out in the testing. As one Twitter user said:

“I do a lot of margin trading at bitfinex and bitmax, tons of forex experience before. Would love to take part in testing and provide clear and constructive feedback. Currently employed es CEO at BCShop PTE LTD so I know how to deliver quick and effective. Binance one love.”

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