Kraken

Kraken Exchange Disables Margin Trading for Some U.S. Residents.

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Kraken Exchange Disables Margin Trading for Some U.S. Residents. Kraken exchange has finally announced it will soon disable the margin trading for some of the Residents of us.

Starting from the 23rd of June, 2021 “in the light of regulatory guidance”.

Kraken

The Margin trading entails an investor who borrows funds from a third party (the exchange in this case) to make trAdes for more than what they own actually.

Kraken exchange enables traders to trade a margin up to 5 times the former value.

Following a statement by Kraken from a blog post. The residents of the United States of America will have to be verified at the intermediary level on the exchange.

And self-rating as an Eligible Contract Participant (ECP) under the United States law to qualify for margin trading.

Who is an ECP?

An Eligible Contract Participant is a person or a group that is allowed to participate in financial transactions that are not yet open to retailers (clients).

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To qualify for this, individuals must have assets of $10 million that are being invested on a permissive basis. Whereas, the institutional clients must have $10 million in the total gross assets.

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Well, starting from the 23rd of June, 2021. The users of Kraken who do not meet up to the requirements needed will be able to only, reduce.

Closeout, or even settle the existing margin positions. In all, they won’t be allowed to open the new ones.

Kraken Decision

The decision Kraken made to disable margin trading goes in line with the similar moves by the rest exchanges.

In November 2020, Coinbase stopped the margin trading services, recognizing advice from the Commodity Features Trading Commission.

During that time, Paul Grewal, the chief legal officer of Coinbase wrote:

“We believe clear, common-sense regulations for margin lending products are needed to protect and provide peace of mind to U.S. customers.

We look forward to working closely with regulators to achieve this goal.”

Kraken has got a really good reason to be nice with regulators. The company has been given a license by the state of Wyoming.

So as to develop a crypto bank in the state, allowing it to hold custody over digital assets, work on the payment systems.

And also allow customers to pay their bills and get their salaries in cryptocurrency.

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Earlier in 2021, Kraken looked up to a funding round that would be useful to the business at $10 billion.

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