Coinbase Enables Margin Trading Up to 3x But Conditions Apply for Individual Traders

Coinbase has announced margin trading for its “eligible” Coinbase Pro customers. The San Francisco-based cryptocurrency exchange announced yesterday. From now on, Coinbase Pro customers in 23 US states can access up to 3x leverage in USD quoted books.

Starting today, Coinbase Pro customers in 23 US states can access up to 3x leverage on USD-quoted books. Trading crypto on margin (or leverage) can amplify the impact of your trades by allowing you to borrow additional funds. https://t.co/RZTiV0eUpf

— Coinbase Pro (@CoinbasePro) February 12, 2020

Coinbase had been one of the few exchanges that did not offer margin, though a really small amount in the line of Bitfinex and Kraken’s 5x, it’s a step in the margin trading direction. Meanwhile, leading cryptocurrency exchange Binance offers a whopping 125x leverage, outdoing BitMEX’s 100x.

Eligibility to Qualify for Margin Trading

The exchange says, margin trading is a much desired feature by their clients and now they have delivered it. Instead of depositing your own additional capital, Margin or leverage basically allows one to borrow additional funds from the platform as such amplifying the impact of the trades.

Only persons who meet the requirements for margin trading will live within one of the 23 states, have a Coinbase Pro account and are active on Coinbase Pro measured by recent balances, trades, deposit and withdrawal activity can avail of this service.

Additional requirements may also apply to engage in margin trading including having an account on Coinbase Pro stacked with enough cryptocurrencies to be used as collateral assets. Meanwhile, institutional customers must be based in one of the 23 states or 9 international countries to access margin trading. 23 states where margin trading is currently available in:

Smart or Yikes?

While trader Scott Melker sees this as a “very smart and conservative” move and those “with a Coinbase account who doesn't know where else to trade will be using this,” not everyone was positive towards this move. Trader Jonny Moe made fun of the move by stating in a tweet,

So then I see after this that they're limiting it to $10,000 in buying power. On 3x that's barely over $3,000 in initial capital. Yikes.

Then I find out after that, it's long only. More YIKES! Gives a whole new meaning to the term, "buying power". https://t.co/P8Mc1DQwZy

— Jonny Moe (@JonnyMoeTrades) February 12, 2020

The exchange says over the next year, they plan to further expand this service to customers located in other regions as well.