Coinbase Pro to turn off margin trading starting tomorrow



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U.S. crypto exchange Coinbase Pro announced today that customers will not be able to use margin trading on the platform as of Wednesday.

According to the Coinbase blog, General Counsel Paul Grewal said that no new margin trades will be allowed from November 25 at 2:00 p.m. PST. The exchange said it would take the product offline in December “after all existing margin positions have expired.”

“We believe that clear, common sense regulations for margin loan products are necessary to protect and bring peace of mind to US customers,” said Grewal. “We look forward to working closely with regulators to achieve this goal.”

Grewal said the move was a response to “new guidance from the Commodity Futures Trading Commission,” or CFTC. In March, the commission clarified its position on the “effective delivery” of assets to include crypto purchased using leveraged trading or other methods. The CFTC guidelines stated that there would be a 28-day deadline for physical delivery, allowing buyers to use any digital asset purchased after that period.

When participants trade futures contracts in traditional markets, they are betting on the future price action of an underlying asset. If they hold these futures contracts throughout settlement, they end up receiving the underlying asset, which is physically delivered to them. However, the CFTC guidelines state that for digital assets, the parties selling tokens and those acting as facilitators – which would include Coinbase – would have no control over the crypto used for margin trading once it was released. it has been delivered to the customer.

It’s unclear what impact this move will have on the markets, but some experts suggest it could slow the recent price hike.

The announcement comes on the same day that Coinbase said it would no longer use Form 1099-K to report its users’ cryptocurrency activity to the Internal Revenue Service. This tax form was intended for Coinbase users who had over 200 transactions and volume of $ 20,000 per year, but did not include an accurate report on the basis of costs and the fair market value of any cryptocurrency investment.

Coinbase announced that it will use 1099-MISC forms to report tax information for customers who have received $ 600 or more in crypto “from Coinbase Earn, USDC Rewards, and / or Staking in 2020.” However, it will not issue tax forms to users who are not US citizens residing outside the country.