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Cryptocurrency exchange Kraken tightens rules for margin trading


Tighter rules for margin trading of virtual currencies

Cryptocurrency (cryptocurrency) exchange Kraken announced on the 9th that it will change the rules of margin trading.

From the 23rd, some standards for customers to trade margin will be tightened. It is said that this change took into account regulatory guidance, but it has not been clarified what kind of rules of which institution.

Kraken is an exchange that has been operating early in the cryptocurrency industry. In order to provide financial freedom and promote financial inclusion, we are developing business with the mission of promoting the spread of virtual currencies, and the Japanese corporation “Payward Asia” is in-kind to domestic customers in accordance with Japanese regulations. Provides trading services.

Relation: “5 target coins” Kraken Japanese cryptocurrency exchange started service

According to the official website, Kraken’s customer accounts are classified into the following four categories according to the range of services available and the account verification procedure performed.

  • Starter
  • Express (only for some US investors in the US)
  • Intermediate
  • Pro

The contents of this rule change are the following two points.

  • We do not offer margin trading services to US clients who do not meet certain requirements.
  • In order for “Starter” clients outside the United States to continue margin trading, they must complete the certification process and become “Intermediate”.

Regarding the “specific requirements” for the first US customer, further details will be contacted individually to the target audience, so it is not clear what requirements must be met. “Intermediate” and “Pro” customers outside the United States are not subject to this rule change.

In the future, Kraken will now email investors and Starter clients in the United States. If you do not meet the required conditions by the 23rd, then only allow the remaining positions to be closed.

Positions that remain after the 23rd will be treated as expired 28 days after the order date.

About this rule change

As mentioned above, it is not clear what kind of regulatory guidance affected this rule, but the “Rules for the delivery of virtual currencies” set by the US Commodity Futures Trading Commission (CFTC) There is a view that it is related.

In 2016, CFTC pointed out that the cryptocurrency exchange Bitfinex did not deliver cryptocurrencies to customers who used margin trading. He claimed that Bitfinex still had the private key after the transaction. Bitfinex did not admit or deny it, paying a fine of $ 75,000.

Relation: US CFTC formulates rules regarding “delivery” of virtual currency transactions

To address this issue, CFTC announced the following two rules for the delivery of virtual currencies last year. In November 2020, Coinbase, a major US exchange, stopped the margin trading service, saying that it would follow the guidance of CFTC.

  • Allow customers to own and manage all commodities (commodities) within 28 days after trading, regardless of the method of selling, such as margin trading.
  • Commodity providers and sellers lose their profits, legal rights and control authority 28 days after the date of trading, regardless of any other method, such as margin trading.

Relation: US Coinbase to end margin trading of virtual currency


Author: K. Kobayashi
Reference: Kraken

Images used under Shutterstock license
“Cryptocurrency” means “cryptographic assets”

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