After Binance, FTX is now also massively cutting margin trading. Meanwhile, Uniswap is also bowing to the regulatory headwind.
Anyone who has followed the latest activities in crypto regulation cannot help but get the impression that the Bitcoin exchanges are increasingly on the radar of financial market regulators. Now there are increasing signs that the exchanges are increasingly taking a cuddle course with the regulation. Not only are KYC procedures now part of the agenda – especially with exchanges that allow you to switch from fiat to crypto currencies. Some Bitcoin exchanges have also recently put the handbrake on when it comes to controversial investment vehicles and services, which have drawn the suspicion of some financial market regulators. The latest example of this development are the decisions of Binance and FTX to massively limit the leverage on their futures trading platforms.
Binance and FTX lower leverage to a maximum of 20x
FTX started on July 25th. Founder and CEO Sam Bankman Fried announced on Twitter that FTX had decided to lower the maximum leverage from 101x to 20x. “SBF” hardly commented on the exact reasons for the decision in its 11-part tweet series. The quintessence of his tweet storm: FTX has always advocated responsible trading, but nevertheless managed to lower the maximum leverage – apparently also to do justice to the entry of regulation into the crypto sector:
And so, after a lot of back and forth, we will take the first step here: a step in the direction in which the industry is moving, and has been for a while. Today we are going to get rid of the high leverage of FTX. The largest allowed value will be 20x,
said the FTX boss, who previously emphasized that high leverage trading on FTX was already a niche market. The average leverage was therefore 2x.
Binance is following suit
Only a little later, Binance boss Changpeng “CZ” Zhao announced a similar measure for the futures platform of the world’s largest Bitcoin exchange. While existing customers can still trade with outrageous levers there for the time being, new customers have had to make do with 20x since July 19.
@binance futures started last Monday, July 19th, 7 days ago, to restrict new users to a maximum leverage of 20x. (We didn’t want to make a thing out of it). In the interests of consumer protection, we will gradually apply this for existing users over the next few weeks,
says Zhao, who apparently couldn’t help a swipe in brackets on FTX.
You too, Uniswap?
Even in the run-up to the decentralized competition from Binance and FTX, there was movement in terms of investor protection. 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. These include numerous synthetic assets that map the prices of stocks or commodities and are therefore potentially a thorn in the side of regulators.
Stock tokens in particular have recently faced increased headwinds from the regulatory side. Against this background, Uniswap seems to have made the decision to ban such tokens from its interface.
To continue to innovate and make this tool available to the Uniswap community, we are monitoring the evolving regulatory landscape. Today, in line with measures taken by other DeFi interfaces, we made the decision to restrict access to certain tokens via app.uniswap.org.
The project emphasizes that the tokens can still be traded via the platform – after all, the Uniswap protocol is open-source.
What is important is that the Uniswap protocol – unlike the user interface – is a series of autonomous, decentralized and immutable smart contracts. It offers unrestricted access to anyone with an internet connection. Likewise, this decision has no impact on the code of the Uniswap interface, which remains open source, or the many other portals or locally operated entities that are used to access the Uniswap protocol,
called it in a blog entry by DEX on July 23.