Cryptocurrency exchange Binance, amid serious pressure from regulators in many countries, is trying to maintain its position in the market and user loyalty. To do this, she is ready to reduce the leverage limit for trading futures by 20 times.
Binance CEO Changpeng Zhao announced on his Twitter page yesterday that the leverage for futures on the exchange began to decrease as early as July 19 for new customers.
Changpeng Zhao believes that all this done in order to protect consumers. And therefore will consistently give this mechanism to users over the next month.
This action issued 2 months after the crypto exchange announced that it was starting to support BTC / USDT contracts with margins of up to 125x.
Binance faced with increased attention of the authorities
It is worth recalling that over the past few months, the Binance cryptocurrency exchange has been under serious pressure from several regulators operating in different countries.
As a reminder, in June 2021, the UK Financial Conduct Authority banned Binance Markets Limited from any regulated activity in the country without prior written approval.
The Cayman Islands began checking the work of Binance. Thailand and Hong Kong accused the company of operating without a license. Japan issued another warning to it.
Polish regulators warned consumers about the risks of interaction with the platform. While Italy and Malta warned about unregulated activities of Binance.
Representatives of the exchange periodically make statements that they provide all the necessary legal support to regulators. And are always ready to follow the recommendations and instructions of regulators.
Whether this will have the proper effect on the bureaucratic apparatus of the regulators remains to be seen. The exchange hopes that all issues settled in the near future.
This behavior of regulators in relation to the Binance exchange may be due to the fact that in this way the global policy is being worked out in relation to all crypto platforms currently operating in the cryptocurrency economy.
FTX has limited leverage to 20x
By the way, another cryptocurrency exchange FTX, located in Hong Kong, took a similar step as Binance. The exchange representatives also reduced the leverage from 101 to 20 times.
According to Founder and CEO Sam Bankman-Fried, high leverage trading accounts for only a small fraction of the trading volume on a crypto exchange. The average leverage is only 2X.
“We really believe that high leverage has a right to exist. But we don’t think this is an important part of the cryptocurrency ecosystem. And in some cases, this is even the unhealthy part of it. Again, a very small percentage of users will be affected by the limitation. And while users say they like being able to trade with high leverage, very few use it. We think it’s time to get away from this. Plus, we’ll be launching some cool new features soon”, wrote Bankman-Fried.
Thus, cryptocurrency exchanges have gone to reduce the level of leverage in order to maintain the policy of “responsible trading” and “protect the interests of users”.
Perhaps other cryptocurrency exchanges will do the same.