Coinbase International Exchange, an extension of the U.S.-based Coinbase cryptocurrency platform, has implemented a new policy to limit trading leverage on its perpetual futures products to 10x. This change, announced on December 28, affects a range of popular perpetual futures contracts including Bitcoin, Cardano, Ether, Litecoin, Solana, and Ripple.
In addition to the leverage limit, traders using 10x leverage will face a cap on the notional value of all their perpetual contracts, restricted to $90,000. This move is part of Coinbase International's effort to manage risk and ensure responsible trading practices on its platform.
The exchange clarified that while trading can continue beyond the 10x leverage limit, accounts reaching this threshold will be subject to default initial margin (DIM) requirements. These requirements vary based on the digital asset involved, with DIM for Coinbase International's perpetual contracts ranging from 20% (equivalent to 5x leverage) to 40% (equivalent to 2.5x leverage).
Coinbase International reviews these leverage limits regularly, taking into account factors such as the depth of the exchange order book, trading volume, and results from stress tests conducted on the balances of its insurance funds. The primary aim of these reviews is to offer clients a balanced approach to accessing 10x leverage while mitigating systemic risks associated with highly leveraged trading.
Coinbase International launched its perpetual futures trading in September, following the acquisition of a Class F license from the Bermuda Monetary Authority (BMA). This international arm caters exclusively to non-U.S. consumers in specific countries. Before customers can open an advanced trading account with Coinbase, they undergo an evaluation to determine their eligibility for these products. The establishment of Coinbase International in Bermuda came as a strategic move, particularly praised for the region's transparent, compliant, and cooperative regulatory environment, especially in the wake of regulatory challenges faced by its U.S. counterpart.
