More than a few cryptocurrency traders would like to leverage their funds to make bigger plays. That’s especially true as Bitcoin value explodes, and the cryptocurrency market expands quickly.
But margin trading is always a tricky game, and can be regulated in different ways than other kinds of trades.
So where can you go to trade on margin with cryptocurrencies? Some of the more common names, like BitMex, are currently under severe regulatory pressure, with the top brass being led away in handcuffs.
Then there are the platforms that are just now changing how they do business, to proactively avoid the hot seat. Take Coinbase, where word came out that as of November 25th, margin trading will not be part of the exchange functionality available to traders any longer.
In explaining the move, spokespersons cite guidance from the U.S. Commodity Futures Trading Commission (CFTC).
“We believe clear, common sense regulations for margin lending products are needed to protect and provide peace of mind to U.S customers,” Coinbase’s Chief Legal Officer Paul Grewal wrote in a statement.
So what can you do to enjoy safe and compliant trading of cryptocurrencies? Here are some alternatives for cryptocurrency exchanges that feel confident about their regulatory compliance, and still offer leveraging of funds.
Currency.com
Among the strongest regulated exchanges, Currency.com is a shining example. There’s been no kerfuffle or musical chairs at the Currency.com exchange because of regulatory issues.
Users can trade over 1500 assets with no fees until the end of January and engage in leveraged trading up to 500x with certain assets.
Currency.com is headquartered, and licensed to operate, in Gibraltar, a small nation with forward-thinking leadership on cryptocurrency.
That’s part of Currency.com’s strategy, but early efforts to get necessary licensing and proving trade security have also paid off for this exchange.
BitFlyer Lightning
Over at BitFlyer’s LightningFX platform, users can make margin trades for up to 4x leverage, with strategies like spot trading and staking out various long and short positions to benefit from BTC price activity across the board.
The minimum buy-in is 1% of one Bitcoin, and the exchange functionality is on 24/7, including weekends, holidays, and any time the urge strikes to open a new position.
Profit taking orders and stop-loss orders (which are so important with margin trading) are easy, and through the BitFLyer API, users can perform a range of checks, cancel orders, and view past trades.
BitFlyer has become quite notable for its strict adherence to compliance. Traders should have nothing to fear when joining these guys.
Crypto.com
Crypto.com is another regulated exchange that has started to allow margin trading. As of Nov. 19, a private beta feature allows for up to 3x leverage for BTC/USDT pairs.
Crypto.com offers some direct user on-boarding in all caps to make clear the risks associated with these types of trades.
The exchange, leaders say, will be looking to add more cryptocurrency pairs in the months to come; for now, BTC remains the most popular option for traders moving into Bitcoin from, say, gold or equities.
Users can also get preferential interest rates for staking on the platform.
Crypto.com has worked diligently in the past year to expand all over the globe, obtaining proper licensure in the EU and just recently in Australia.
Kraken
The Kraken exchange is a pretty unique example of an exchange with some regulatory ambiguity worldwide.
Interestingly, Kraken explains on the website that it is regulated by UK and Australian officials, but that it also offers margin trading and other services to users within the United States – except for two states, Washington and New York.
Spokesperson explaining the difference state that “because maintaining regulatory measures in certain states can be exuberantly expensive, … it is not possible to include all the states in the country,” which suggests that U.S. federal laws are manageable for Kraken, but New York and Washington laws are not.
Take a look at any of these platforms in your search to practice safe and compliant margin trading, and look at the pros and cons of various parties headquartered in different nation-states.
Even though some exchanges are under pressure, there are still some safe places to do this kind of business and leverage funds for crypto plays.
Poloniex
This revolutionary platform is America-based, but has a margin trading feature that it feels falls squarely within the bounds of regulatory compliance in the U.S.
What’s interesting is that Poloniex manages a peer to peer margin trading system where it’s not the exchange itself that lends the money, but other users.
That seems like a handy way to get around some of the issues that have plagued other exchanges.