Binance lowers leverage to 20x similar to FTX

The CEO of Binance, Changpeng ‘CZ’ Zhao, has announced that Binance will also lower the leverage trading. From now on, the maximum possible leverage

will only be 20x. The

Binance CEO

made the

announcement

on

Twitter on Monday. The news means that from now on, users trading leverage on Binance will only be able to use a maximum leverage of 20x. Currently, Binance offered options to trade with le

verage up to 125x. The founder of Binance stated:

Binance futures

started restricting new users to a maximum leverage of 20x last Monday, July 19, 7 days ago. (We didn’t want to make this a big deal). In the interest of consumer protection, we will apply this to existing users gradually over the next few weeks. Sponsored Sponsored

FTX also lowers margin trading to 20x

The

news from Binance comes a day after FTX CEO Sam Bankman-Fried announced that the exchange will also lower its maximum leverage to 20x. Bankman-Fried stated that the move is related to the exchange’s approach to “responsible trading.”

The FTX CEO said that there were few users using high leverage. Most traders only used 2x leverage on their trades. Furthermore, he stated that margin trade liquidations accounted for only 1% of the volume and positions on the exchange.

While

there were several arguments for continuing to offer high levels of leverage, Bankman-Fried responded by saying,

And while we think a lot of the arguments about high leverage miss the mark, we also don’t think it’s an important part of the cryptocurrency ecosystem, and in some cases, it’s not a healthy part of that ecosystem

.

Regulatory scrutiny leading to less risky leveraged trading

The recent moves by both exchanges come at a time when regulators around the world have hit Binance in particular. Regulators claim that the platform is engaged in unregulated activity. Binance is currently trying to placate regulators, and Zhao is reportedly considering the possibility of listing Binance’s U.S. subsidiary through an initial public offering (IPO

).

FTX also recently announced a massive $900 million Series B funding round. As a result, it is

one of the largest cryptocurrency exchanges in history. With over 60 investors, including SoftBank, Sequoia Capital and Coinbase Ventures, it is likely that the exchange wants to shed the risk that retail investors have.

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