- Following the collapse of Ftx the Canadian Securities Administration (CSA) of Canada has decided to ban crypto leverage and margin trading.
The bankruptcy of the FTX exchange is one of the most important black events in the crypto market in recent years and its consequences will be seen for a while longer. While thousands of users maintain the hope of recovering at least part of the funds stolen by the company led by the now prisoner, Sam Bankman Fried, some countries take measures to protect their citizens.
The most notable and recent case is that of Canada: the North American country, through The Canadian Securities Administration (CSA) has decided to ban crypto leverage and margin trading after the FTX crash, he explained. Cointelegraph. It is worth noting that the exchange had tried to enter the country in June 2022, but was denied by local regulators.
These types of trades are the ones that tend to have the highest commissions and are the ones that generate good profits for centralized exchanges.
“Custodians will generally be considered qualified if they are regulated by a financial regulator in Canada, the US, or a similar jurisdiction with a financial regulatory and conduct oversight regime“, said the CSA in the statement published on Tuesday, December 13.
Thus, all companies operating in Canada, whether local or foreign (Binance, Coinbase, KuCoin, Crypto.com, for example), must comply with this new regulation to be allowed to continue operating.
With this announcement, the CSA made reference to the previous one, published on August 15 of this year. ANDn that opportunity, Canadian authorities had written that “andThey expected commitment from unregistered cryptocurrency trading platforms operating in Canada, as they pursue registration in the form of a pre-registration commitment.”.
FTX tried to enter the Canadian market
In June, FTX unsuccessfully tried to acquire local platform Bitvo. This move was part of its expansion plan that ultimately did not come to fruition, so Canadian clients were not affected nor was the exchange: to this day it continues to operate without problems without having their funds committed.
Pamela Draper, CEO of Bitvo, explained that the operation was not carried out at that time because “theThe companies were working to satisfy closing conditions, the most important of which was regulatory approval from the Alberta Securities and Exchange Commission.
The Canadian Securities Administration highlighted, once again, that operating in the crypto market is a “high risk” investment and emphasized that it is important to operate with platforms enabled within the country.
What is crypto leverage and how does it work?
Cryptographic leverage or margin trading allows us to use more funds than we actually have: a x10 means that we are increasing the position 10 times, while a x100 is that it grows by 100 times.
For example: if you want to buy 1,000 dollars in Bitcoin, with a leverage of x10 you only need 100 in the account. The rest is borrowed. And the earnings will no longer be for those 100, but for 1,000.
However, not everything is so simple, since when the operation is not successful it is easy to be liquidated. A variation of 1%, in a case like this, could be decisive: since the movement is not over 100 reais, but over those 1,000.
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