Amidst the constant scrutiny met from global financial institutions as well as regulators, Binance has decided to reduce trade risks by adopting two measures.
In addition to the delisting of the margin trading pairs, Binance has also decided to bring down the maximum leverage from 100x to 20x.
Binance is the world’s largest crypto exchange platform that allows a wide variety of traders and investors to play around with both fiat and cryptocurrencies. It helps customers take advantage of the dynamic new currency in the market while also letting people know about the uncertainties that come along with the high profits and losses.
The Big News from Binance and Possible Reasons for the Sudden Shift
Amidst the constant scrutiny met from global financial institutions as well as regulators, Binance has decided to reduce trade risks by adopting two measures. The first one refers to delisting all AUD, EUR and GBP Margin trading pairs that constitute both fiat trading pairs and the isolated margin trading pairs, you can have a complete list of the delisted pairs on the Binance website.
Following the announcement, the crypto exchange will write off the mentioned fiat trading pairs on August 10 and then shift to automatic settlement while also canceling all related pending orders. On the other hand, the isolated margin trading pairs will be delisted in their entirety on August 12.
The move comes in the wake of innumerable threats from regulatory parties like the UK’s Finance Conduct Authority. The latter led to the suspension of withdrawals in the form of EUR and GBP currencies. Some countries like the USA, UK, Italy and some others are at the forefront of regulating the crypto market for avoiding volatility in the future. Some financial firms like Barclays and NatWest have already blocked payments to the crypto exchange Binance.
What Is Margin Trading?
Crypto Margin Trading refers to a model where the traders or users are given a choice to borrow extremely high funds to leverage their positions in the crypto market. The lending of funds will take place as per the criteria of maximum applicably leverage. The Margin Trading Service, which was started in 2019, has been subjected to a lot of criticism owing to the inherent volatility and risk associated with such lenient high leverage. The critics believe that such a service lets the retail users fall into a liquidation trap thus clearing out all their investments.
The above consequence has been noted down in Binance’s official announcement on its website. It specifically mentions that such margin trading can result in both high profits and losses. The notice also stresses the unpredictability of returns in the future and its disconnection from past profits. It quite directly educated the readers on the margin balance getting liquidated in case there is extreme price movement.
The crypto market is going to bring about several restrictions in its Modus Operandi; thanks to the increasing regulatory obstructions by several countries. Such changes in the overall crypto industry are bound to take place and this just looks like a start; the reason being some of these nations are already in the process of aligning digital currency with the national fiat currency.
The illustrations were provided by Depositphotos.com