Coinbase officially launches margin trading service, supporting up to 3x leveraged trading of BTC, ETH and LTC

This Monday, Coinbase's GDAX digital currency exchange officially launched margin trading services.

Satisfying the interest of institutional investors

GDAX Director Adam White said in the announcement:

“Over the past few years, we have seen a growing desire among institutional investors to add advanced trading features. We believe this functionality [margin trading] will attract a new group of institutional clients, ultimately supporting the growth of the digital asset industry and reducing volatility in the industry.”

White believes that institutional traders’ demand for digital currencies is being suppressed, as they have been sitting on the sidelines waiting for the SEC to make a decision on the Bitcoin ETF. When the Bitcoin ETF is rejected by the SEC, White said these professional investors will turn directly to Bitcoin spot exchanges.

According to Forbes, White described how “these institutional traders will only go to US exchanges like GDAX — trusted and secure exchanges with an impeccable trading record, while also meeting regulatory requirements.” White also noted:

“We are the first and only to offer a product that meets the requirements of professional institutional investors who need to consider various state and federal regulations.”

GDAX’s Financing and Lending Services

According to Coinbase’s website, in addition to operating in Europe, the United Kingdom, Canada, Australia and Singapore, customers will also be able to use GDAX in some U.S. states “where Coinbase is licensed as a money transmitter, where a license is not currently required, or where Coinbase has not been issued a license.”

Currently, Coinbase has obtained money transmission licenses in 38 states in the United States. According to the official website, "US states that currently do not support GDAX include: Wyoming, Hawaii, and Minnesota."

Coinbase explained that, in order to use the margin trading service of GDAX, consumers must be an eligible contract participant (ECP) as defined in Section 1a(18) of the Commodity Exchange Act. There are many ways to become an ECP, such as entities with total assets exceeding $10 million (net worth exceeding $1 million) or individuals who have cumulatively invested more than $10 million on a voluntary basis as defined in Section 1a(21).

Although GDAX is aimed at institutional investors, it is not the only bitcoin exchange that offers margin trading. Several other exchanges are also providing this service to US customers, including Karen, Whaleclub, cloud mining exchange Cex.io, Evolve Markets, 1broker, eToro, Avatrade, Japan's Coincheck and foreign exchange trading platform Simplefx. White said in a statement:

“Qualified traders can now trade BTC, ETH, and LTC with up to 3x leverage.”