Binance Says It's Cutting Leverage Limit to 20x, a Day After FTX Announces the Same

"We didn't want to make this a thingy," Binance CEO Changpeng Zhao posted Monday on Twitter, a week after making the change.

AccessTimeIconJul 26, 2021 at 6:01 a.m. UTC
Updated Sep 14, 2021 at 1:30 p.m. UTC
Brett Harrison
Founder and CEO
Architect
Don't miss "FTX: What Happened" with the former president of FTX's U.S. arm and Anthony Scaramucci.
Brett Harrison
Founder and CEO
Architect
Consensus 2023 Logo
Don't miss "FTX: What Happened" with the former president of FTX's U.S. arm and Anthony Scaramucci.
Brett Harrison
Founder and CEO
Architect
Don't miss "FTX: What Happened" with the former president of FTX's U.S. arm and Anthony Scaramucci.
Brett Harrison
Founder and CEO
Architect
Consensus 2023 Logo
Don't miss "FTX: What Happened" with the former president of FTX's U.S. arm and Anthony Scaramucci.

Binance, the world's largest crypto exchange by trading volume, said it is reducing the maximum leverage users can use to trade futures contracts, a day after derivatives exchange FTX announced the same change, moves perhaps designed to help avoid the worst of a coming regulatory storm.

  • The new limit is 20 times leverage, the exchange's founder and CEO Changpeng Zhao said in a tweet Monday, down from 100 times.
  • Binance imposed the limit on new users on July 19, and will gradually expand the move to all users, Zhao said.
  • FTX CEO Sam Bankman-Fried announced a similar change is taking place on his platform in a tweet posted on Sunday.
  • Zhao didn't state the reasoning behind the decision, but said that upcoming changes for existing users were "in the interest of consumer protection."
  • A July 23 New York Times article criticized high-leverage trading in crypto as risky. The article implied impending regulatory moves against high leverage margin trading, citing Timothy Massad, a former U.S. Securities and Exchange Commission chairman.
  • Binance's Zhao acknowledged that "volatility is amplified by the leverage," according to the New York Times article.
  • Bankman-Fried said in his Twitter thread announcing FTX's change that high leverage is a small part of positions, not a big contribution to volatility, and that many arguments against it "miss the mark."
  • Exchanges are likely worried about the regulatory screws tightening on margin trading. Huobi suspended the service to Chinese users in June.

DISCLOSURE

Please note that our privacy policy, terms of use, cookies, and do not sell my personal information has been updated.

The leader in news and information on cryptocurrency, digital assets and the future of money, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups. As part of their compensation, certain CoinDesk employees, including editorial employees, may receive exposure to DCG equity in the form of stock appreciation rights, which vest over a multi-year period. CoinDesk journalists are not allowed to purchase stock outright in DCG.


Learn more about Consensus 2023, CoinDesk’s longest-running and most influential event that brings together all sides of crypto, blockchain and Web3. Head to consensus.coindesk.com to register and buy your pass now.