Coinbase International Imposes 10x Leverage Limit on Perpetual Futures

Coinbase International Exchange, renowned in the global cryptocurrency market, recently announced a significant measure: limiting trading leverage to 10x in its perpetual futures products. This decision affects a range of popular cryptocurrencies on the platform, including Bitcoin (BTC), Cardano (ADA), Ether (ETH), Litecoin (LTC), Solana (SOL), and XRP, among others.

This new leverage limit, released on December 28, represents a notable change for traders operating on the exchange. Coinbase International has specified that even after traders reach the maximum leverage of 10x, they will still be able to transact. But they will still be subject to the standard initial margin (DIM) requirements for their accounts. These requirements vary depending on the digital asset, ranging from 20% (5x leverage) to 40% (2.5x leverage) for perpetual contracts.

Did you hear? We upgraded our leverage to 10x on all perpetual futures contracts, empowering you to execute more efficient trading strategies. Learn more about trading perpetual futures with leverage https://t.co/3Hq1KW3D2T pic.twitter.com/wKgYSVlAoG

— Coinbase International Exchange (@CoinbaseIntExch) December 28, 2023

Coinbase leverage restrictions aim to balance trading risks

The company emphasized that these limits are regularly reviewed. Therefore, several factors are taken into account, such as the depth of the order book, trading volumes and the results of stress tests against insurance fund balances. The main objective is to offer access to 10x leverage while simultaneously balancing systemic risks for all traders involved in high leverage trades.

This initiative by Coinbase International comes after the exchange launched perpetual futures trading on September 28, shortly after receiving a class F license from the Bermuda Monetary Authority (BMA). The platform is only accessible to consumers outside of the United States and in select countries. All customers go through an assessment process to determine their eligibility before they can open an advanced trading account with Coinbase.

Coinbase’s expansion into Bermuda, which began in May, came as a response to increasing regulatory pressure faced by its parent company in the United States. The company praised Bermuda’s regulatory environment for its high level of transparency, compliance and cooperation, a crucial aspect of its international operation.

This decision by Coinbase International on leverage in perpetual futures reflects a growing trend in the cryptocurrency market of importing tighter limits on leverage to mitigate systemic risks. Furthermore, it highlights the importance of regulatory compliance and security in cryptocurrency trading operations.

Disclaimer:

The views and opinions expressed by the author, or anyone mentioned in this article, are for informational purposes only and do not constitute financial, investment or other advice. Investing or trading cryptocurrencies carries a risk of financial loss.