Coinbase Inc.'s decision to halt margin trading highlights the tricky path for cryptocurrency exchanges to offer in-demand trading products without running afoul of federal regulators.
At issue is the Commodity Futures Trading Commission’s “actual delivery” guidance meant to clarify when spot-market crypto trades become futures contracts. Coinbase, one of the largest crypto exchanges, cited the guidance as the main reason for halting margin lending on its Coinbase Pro platform effective Wednesday at 5pm EST.
The March guidance could force other unregistered exchanges to follow Coinbase’s lead and drop leveraged or margin trading, said Gary DeWaal, special counsel and chair of ...