Coinbase rolls out 10x spot leverage, but blocks US retail from it

Coinbase Rolls Out 10x Spot Leverage for Eligible Traders

Key Details of Coinbase's Spot Margin Plan

Coinbase plans to introduce spot borrowing with up to 10x leverage, allowing eligible traders to borrow against collateral to buy crypto on spot markets. However, the exchange will exclude US retail customers from the service due to regulatory restrictions.

Eligibility Requirements for US Customers

For US individuals, a 2021 statement by a commissioner at the CFTC describes discretionary investments exceeding $10 million in aggregate, or exceeding $5 million when the transaction is for risk management purposes. This means that US retail customers who do not qualify as Eligible Contract Participants will not have access to the spot borrowing service.

How the Service Works for Eligible Customers

For eligible customers, Coinbase sets maximum leverage at 10x on selected major assets and 5x on other supported assets. Traders can post collateral in more than 15 supported assets, with those holdings remaining on Coinbase. Loan balances, collateral levels, and margin health will be visible in real time across open borrows.

Risks and Considerations

Coinbase warns that borrowed trading magnifies losses as well as gains, and that collateral can be liquidated without notice. The company also notes that losses can exceed the initial deposit. Borrowing rates, collateral valuation haircuts, or discounts applied to pledged assets, and liquidation thresholds are left unspecified, determining the cost of using the service and when collateral is at risk.

Conclusion

Coinbase's planned spot margin offers eligible users a distinct borrowing option for managing their crypto exposure. While the service is restricted to certain jurisdictions and customer types, it represents an expansion of the exchange's offerings and a move towards greater flexibility for traders.