Since the regulatory authorities have strengthened their grip on the regulation of cryptocurrencies, cryptocurrency exchanges have started adopting strict measures to show compliance with regulations. Coinbase Pro, a major cryptocurrency exchange based in the United States has disabled the service of margin trading on its platform. The company has ended margin trading due to some regulatory concerns.
Users can no longer access margin trading on Coinbase Pro
While announcing the news in a blog post, the cryptocurrency exchange said that users now would not be able to access margin trading on the platform of Coinbase Pro. The suspension of margin trading came into effect on Wednesday, November 25, 2020. The Chief Legal Officer (CEO) of Coinbase Pro Paul Grewal said in the blog post that those users who were already using margin trading now cannot make new margin trades.
Moreover, Paul Grewal said that they are waiting for the expiry of all of the existing margin positions. As soon as they are expired, he said, the product will go completely offline in the month of December.
The basic reason behind the closure of margin trading services is regulatory concerns. This decision has been taken keeping in view the recently-issued guidance of the Commodities Future Trading Commission (CFTC). Concerns regarding this guidance have led the exchange to halt the service of margin trading.
In the blog post, the cryptocurrency exchange said that clear regulations are required for products involved in margin trading in order to ensure the protection of users in the United States. As the exchange said:
“We believe clear, common sense regulations for margin lending products are needed to protect and provide peace of mind to U.S customers. We look forward to working closely with regulators to achieve this goal.”
Prior to this suspension, margin trading services were suspended back in the year 2017. However, the exchange once again launched this service at the beginning of this year across the 23 states of the United States.
Coinbase Plan to Issue a new Tax Form
This announcement coincides with the recent announcement of the exchange in which it has said to issue a new tax form called 1099-MSC cryptocurrency tax form while replacing it with the previous tax form 1099-K tax form.