FTX & Binance promote ‘responsible trading’ by reducing max leverage limits

FTX crypto derivatives exchange and Binance, the world’s largest crypto exchange have announced a drastic reduction in the maximum leverage options allowed on their respective platforms. This move has come as part of the exchanges’ initiative towards promoting responsible and secure trading for existing and new users.

FTX’s responsible trading

Sam Bankman-Fried (SBF), FTX CEO announced on Twitter this weekend, that the earlier maximum leverage limit of 101X on FTX will be reduced to a glaring 20x. SBF revealed this move as part of their initiative to enable and “encourage responsible trading.” Furthermore, he shared that leverage trading does not constitute majority activity on the platform. Regardless of having the option to leverage, traders prefer to not gamble in leveraged money on the existing volatile nature of cryptocurrencies.

“This will hit a tiny fraction of activity on the platform, and while many users have expressed that they like having the option, very few use it.”, SBF tweeted.

Where on one hand FTX received a positive response from the crypto community for encouraging responsible trading. On the other hand, many traders still feel that the 20x leverage limit is still high risk and enough for traders to get caught in the web of gambling away over-calculated trades. Especially, for new investors, 20x is substantial leverage that could cost a fortune on their first few trades.

Binance’s Consumer Protection

Binance also revealed that it has already begun slashing its leverage limits for new users and implement the same for existing ones in the coming weeks. Binance co-founder and CEO, Changpeng Zhao tweeted on Sunday that Binance futures have commenced the limitation on leverages from 19^th July itself, restricting the maximum leverage limit to 20x for new users.

“In the interest of Consumer Protection, we will apply this to existing users progressively over the next few weeks,” Zhao tweeted.

Just two months ago, Binance has announced 125x leverage limits for BTC/USDT contracts. However, Binance has witnessed an inevitable global regulatory crackdown since then. Recently, it announced the discontinuation of stock token services after getting bombarded by several nations on regulatory grounds.