Intensified Law Enforcement in the U.S.! Coinbase Pro halts margin trading, Binance withdrawal deadline extended to 14 days

Coinbase Pro resumed margin trading in February this year, only to announce its halt within a year under the intervention of the Commodity Futures Trading Commission (CFTC) in the United States; meanwhile, Binance.com, which had previously announced the cessation of service for U.S. users, has accelerated its pace, shortening the withdrawal deadline from the original 90 days to 14 days.

Coinbase Pro Unlikely to Expand Derivatives Market

In fact, this top U.S. exchange offered margin trading in the early days, but on June 21, 2017, when the price of Ether plummeted from $317.81 to $0.1, it caught the attention of the CFTC and subsequently halted its margin trading services.

It was reported in February that Coinbase Pro announced the restart of 3x margin trading services, limited to residents of 23 compliant states, and requiring users to be active on Coinbase Pro (measured by recent trading, balances, and deposits/withdrawals).

Less than a year after resuming this service, this move is perhaps related to the CFTC's aggressive actions against BitMEX in early October, accusing the exchange of violating multiple regulations and even arresting its co-founder, Samuel Reed. While BitMEX has since resumed operations and actively cooperated with regulatory bodies to implement KYC verification, its influence has waned.

In the announcement from Coinbase Pro, their Chief Legal Officer stated:

In response to new guidance from the CFTC, we have stopped offering margin trading products. After November 25, users will no longer be able to engage in margin trading, all open orders will be canceled, and the products will be taken offline after all margin positions expire in December. We believe that derivative products like margin trading require clear regulations, and we will work closely with regulatory bodies to achieve this goal.

However, other exchanges like Kraken and Bitfinex, which also offer margin trading services to U.S. residents, do not seem to be affected and have not provided any response. Meanwhile, mainstream exchange Binance.com is actively distancing itself from U.S. users.

Binance Issues Ultimatum

As previously reported, although Binance.com states in its registration process that it does not serve U.S. users, in reality, users can simply click "I am not a U.S. person" to complete the registration and use the platform. Following the BitMEX incident, Binance notified U.S. users via email to withdraw their assets within 90 days, with the contents of the email as follows:

We have noticed that your account's IP address is associated with the U.S., and due to regulatory requirements, we are unable to provide services. If you are a U.S. citizen or resident, please transfer your assets within 90 days and consider using Binance US or other platforms in the U.S. region.

Now, Binance has accelerated its actions, significantly shortening the 90-day withdrawal deadline to 14 days. The latest email states:

You have 14 days to close all positions on your account and transfer your assets, otherwise, your account will be locked. Once your account is locked, you will need to submit a ticket through our customer service system for further assistance.

Nevertheless, Binance is unlikely to overlook the United States, a country with a population of 330 million, and will likely actively promote the adoption of Binance US in the U.S. In the meantime, the average daily trading volume of Binance US still lags behind many lesser-known exchanges.