Just a few months after the start of margin trading on Coinbase Pro, the company deactivated the feature. Margin trading allows you to trade with leverage. But it works both ways – margin trading allows you to multiply your profits and losses.
As of November 25th, 2:00 p.m., users will no longer be able to place new margin trades. Existing margin positions will expire in the coming days and weeks. As soon as these positions expire, margin trading is permanently deactivated.
The company follows the instructions of the Commodity Futures Trading Commission. Interestingly, the CFTC was aware of the company's plans to introduce margin trading.
Coinbase says it has regular discussions with the CFTC and gives them an overview of upcoming products and services. The same thing happened with margin trading.
Margin trading was not available on Coinbase's main website. It has been limited to a few Coinbase Pro users who have a limited number of users who can access the feature.
Still, Coinbase would not have started margin trading if the company had expected a change in course at the regulatory level. More than 100,000 users have signed up on the waiting list, which indicates some interest from the Coinbase user base.
However, the company has no choice but to quit margin trading as it tries to comply as closely as possible with applicable regulations. Let's see if other exchanges operating in the US will follow suit.