One of the worlds biggest exchanges, Binance announced earlier today that they are launching margin trading. In a blog post explaining the new product, it details that the new venture is part of Binance’s “effort to help push the industry forward and freedom of money”. According to the CEO of the exchange, Changpeng Zhao, the introduction of margin trading will also be of great assistance to the exchange as the CEO states:
“This is another step in providing an inclusive cryptocurrency trading platform catering to the needs of both advanced institutional traders and retail traders under the same roof,” said Changpeng Zhao. He went onto say, “we are providing a new tool in the financial services and cryptocurrency markets to help amplify trading results of successful trades.”
As explained by Ethereum World News margin trading, “allows investors to leverage their positions, meaning that they can borrow funds from the exchange to increase their risk, and thus return potential. In Binance’s case, users can take on leverage of up to three times their trade size, meaning that if a user has one Bitcoin, they can make a trade as if they had three.”
This news comes after the ErisX exchange announced earlier this week that it has secured a license for derivatives clearing organisation (DCO) from the Commodity Futures Trading Commission (CFTC). This provides it with the ability to launch physically-delivered Bitcoin futures. Both LedgerX and Bakkt are soon expected to follow in their footsteps.
The co-founder of Binance, Yi He said:
“Though the current cryptocurrency market and legacy platforms for margin trading poses greater risks and benefits at the same time, we are confident that its development coupled with more knowledge on proper risk management will help realize greater benefits in the long run. With margin trading being one of the most requested services from our community, this is a testament to the large market demand from retail and institutional traders alike and its promising possibilities in the future.”
The massive crypto exchange startup is soon expected to make a few announcements in the the near-future. On top of this, the long string of clients Binance has in the United States will soon be ditched due to regulatory worries. Instead, it has opted to create an independent platform for US citizens in order to fill the gap and capture demand.