After Binance, FTX is now also massively curtailing margin trading. Meanwhile, Uniswap is also bowing to the regulatory headwinds.
Anyone who has followed the latest activities in crypto regulation cannot help but get the impression that bitcoin exchanges are increasingly finding themselves on the radar of financial market regulators. Now, signs are piling up that the Exchanges are increasingly cozying up to regulators. Not only are KYC procedures now the order of the day – especially for exchanges that facilitate the exchange of fiat for cryptocurrencies. Even in terms of controversial investment vehicles and services that have drawn the suspicion of many a financial market regulator, some bitcoin exchanges have recently put the handbrake on. The latest example of this trend is the decisions by Binance and FTX to massively limit leverage on their futures trading platforms.
Binance and FTX lower leverage to a maximum of 20x
FTX made the first move on July 25. Founder and CEO Sam Bankman Fried announced on Twitter that FTX had decided to lower its maximum leverage from 101x to 20x. “SBF” barely comments on the exact reasons for the decision in his 11-part tweet series. The quintessence of his tweet storm: FTX has always propagated responsible trading, but has nevertheless decided to lower the maximum leverage – apparently also to meet the entry of regulation into the crypto sector:
And so, after much back and forth, we’re going to take the first step here: a step in the direction the industry has been moving, and has been for a while. Today, we’re going to do away with the high leverage of FTX. The largest value allowed will be 20x,
said the FTX CEO, who previously pointed out that high-leverage trading on FTX was a niche market anyway. As a result, the average leverage has been 2x, he said.
Binance follows suit
Only a little later, Binance CEO Changpeng “CZ” Zhao announced a similar measure for the futures platform of the world’s largest Bitcoin exchange. While existing customers can continue to trade there with harebrained leverage for now, new customers have had to make do with 20x since July 19.
@binance futures started limiting new users to a maximum leverage of 20x last Monday, July 19, 7 days ago. (We didn’t want to make a thing out of this). In the interest of consumer protection, we will apply this to existing users gradually over the next few weeks.
said Zhao, who apparently couldn’t resist a bracketed dig at FTX.
You too, Uniswap?
Even in the run-up, there has been movement on investor protection even among Binance and FTX’s decentralized competitors. As Uniswap Labs, the organization behind the largest decentralized exchange (DEX) by trading volume, announced last week, over 100 tokens from the Uniswap user interface have been banned from app.uniswap.org. Among them are numerous synthetic assets that track the prices of stocks or commodities, potentially making them a thorn in regulators’ side.
Stock tokens in particular have recently faced increased headwind from the regulatory side. It is against this backdrop that Uniswap’s decision to ban such tokens from its interface appears to have been made.
In order to continue to innovate and provide this tool to the Uniswap community, we are monitoring the evolving regulatory landscape. Today, in line with actions taken by other DeFi interfaces, we made the decision to restrict access to certain tokens via app.uniswap.org.
In doing so, the project emphasizes that the tokens would still be tradable through the platform – the Uniswap protocol is open source, after all.
Importantly, unlike the user interface, the Uniswap protocol is a set of autonomous, decentralized and immutable smart contracts. It provides unrestricted access to anyone with an internet connection. Similarly, this decision does not impact the Uniswap interface code, which remains open source, or the many other portals or locally operated instances used to access the Uniswap protocol,
according to a July 23 DEX blog entry.