Poloniex Will Disable Trading for Nine Altcoins for U.S. Customers Only

On Thursday (May 16), crypto exchange Poloniex, which was acquired last year by FinTech startup Circle, On Thursday (May 16), crypto exchange Poloniex announced that it plans to disable the markets for nine cryptoassets (that are currently listed on its platform) for its customers in the U.S. 

The nine affected altcoins are Ardor (ARDR), Bytecoin (BCN), Decred (DCR), GameCredits (GAME), NEO Gas (GAS), Lisk (LSK), Nxt (NXT), OMNI, and Augur (REP); trading in these assets will be disabled on Friday, May29, at 16:00 UTC, for the exchange's customers in the U.S. (this action will not affect those customers outside the U.S.).

Via a blog post published a short time ago, Poloniex explained that it was taking this action due to the lack of regulatory clarity in the U.S. market. More specifically, it seems that Poloniex does not want to get in trouble with the U.S. Securities and Exchange Commission (SEC) since these assets might be considered "to be securities." 

Poloniex says that it understands how "frustrating" this decision will be for its U.S. customers, but it had no choice since it is "committed to complying with regulatory requirements in every jurisdiction."

All U.S. customers who have holdings in any of the aforementioned cryptoassets on Poloniex "must finalize all trades and close any positions in these assets prior to May 29th." After the delisting in the U.S. takes place, these customers will still be able to "withdraw these assets from their wallet" for as long as these assets stay listed globally.

What is significant about this announcement is that is probably the first time that a crypto exchange has chosen to delist certain cryptoassets for a subset of its customers due to regulatory uncertainty over whether those assets are securities or not, but now that Poloniex has set the precedent, it seems more probable that in the near to medium term we will see other U.S. crypto exchanges (such as Kraken) take a similar action.

Featured Image Courtesy of Poloniex

Bitfinex Wants to Offer 100x Leverage For Crypto Derivatives Trading

Michael LaVere
  • Bitfinex will offer 100x leverage trading for cryptocurrency derivatives
  • According to the exchange's CTO, the hedging product is "ready for prime time"

Cryptocurrency exchange Bitfinex revealed it wants to offer derivatives products with up to 100x leverage for cryptocurrency traders. 

Hedging On Cryptocurrency Derivatives

Chief Technology Officer Paolo Ardoino told The Block on June 25 that the cryptocurrency exchange was ready to ship a 100x leverage product for certain users. According to the post, the project has been under development for some time and is “now ready for prime time.” 

The product was referenced in last month’s whitepaper published by Bitfinex for its $1 billion private token sale of LEO, stating

“Qualified Bitfinex account holders will be able to trade a new hedging product through a derivatives wallet.”

The whitepaper originally claimed that the new hedging mechanism would be released by the end of June, a timetable that fits with Ardoino’s “ready for prime time” statement. 

Ardoino confirmed that only “verified” customers will be allowed access to the product, given the risks involved in such highly leveraged trades. 

The CTO also took to Twitter to quell user concerns over Bitfinex’s existing 3.3x margin trading. Ardoino explained 100x leverage will be “optional,” and that their current leveraged trading products will be unaffected by the release. 

Big Risk, Big Reward

Bitfinex is looking to compete with rival exchange BitMEX, who already offers 100x leverage through its bitcoin perpetual swap contract. However, Bitfinex claims its product is designed as a legitimate hedging tool for clients, rather than a gambling mechanism. 

Max Boonen, CEO of trading firm B2C2, believes the product will only appeal to retail hedgers, as large investors will shy away from the risks involved in 100x trading. 

According to Boonen, 

“There’s nothing wrong inherently about 100x. But as a commercial hedger you want lower leverage margin. The larger investor wouldn’t want to take the risk of 100X, typically. They don’t want to go balls to the wall.”

The cryptocurrency derivatives market has been heating up. Last week bitcoin-bull Mike Novogratz’s Galaxy Digital announced plans to offer cryptocurrency options contracts.

Binance has also reportedly been exploring futures trading. On June 24, Binance CEO Changpeng Zhao tweeted the exchange had executed its first margin liquidation for a BTC short.