Canada bans crypto leverage and margin trading after FTX collapse

Silberman

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Quote from: goaldigger on December 17, 2022, 04:17:01 PM

Quote from: crzy on December 17, 2022, 03:44:05 PM

Quote from: blockman on December 17, 2022, 03:07:13 PM

I think it's a good move by the Canadian government but, instead of banning it, they should have an education drive that it's highly risky, and their citizens before engaging in it must be aware of the risk.
Because no doubt that there are also traders that makes a lot of money through those and those that don't make money obviously don't know how it works, they've just overheard it from someone that it makes a lot of money but it's not easy.

Even if they spread awareness about this one, many will still become more greedy and will still try leverage trading so I think the best solution is really to stop it. There’s a lot of issues on futures trading as well, many got liquidated instantly and maybe this is the way of the government to prevent you from losing that much.

There’s always a risk in trading but banning it is like telling your people not to get their freedom on choosing where to spend their money. If the government wants to help the traders or anyone who are willing to trade then they should educate them and let them decide if they will still push this through or will stop doing it. Futures are more profitable if you are already familiar with it, so banning that option might prevent you from getting more profit.

However leverage works by borrowing money from the exchange, so in a way you are not actually making use of your own money and instead you are using the money of someone else to increase the exposure you have to the market without investing the necessary capital to do something like this, so in a way Canada is not banning traders from using this form of trading but it is banning exchanges to offer this option, you can still use your money in any way you want, you are just forbidden of using the money of someone else in whatever way you want.

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Quote from: crzy on December 17, 2022, 03:44:05 PM

Quote from: blockman on December 17, 2022, 03:07:13 PM

I think it's a good move by the Canadian government but, instead of banning it, they should have an education drive that it's highly risky, and their citizens before engaging in it must be aware of the risk.
Because no doubt that there are also traders that makes a lot of money through those and those that don't make money obviously don't know how it works, they've just overheard it from someone that it makes a lot of money but it's not easy.

Even if they spread awareness about this one, many will still become more greedy and will still try leverage trading so I think the best solution is really to stop it. There’s a lot of issues on futures trading as well, many got liquidated instantly and maybe this is the way of the government to prevent you from losing that much.

And that's why they've ended up with the decision to just ban it because they know that many will still do it and when they've already accumulated a lot of loss.
The government will know and they won't like the outcome of it as if their citizens are losing money against the government. The solution of stopping varies on the situation but it's all about their government ruling, if they can step onto this one then that's it no one can stop them.

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Quote from: crzy on December 17, 2022, 03:44:05 PM

Quote from: blockman on December 17, 2022, 03:07:13 PM

I think it's a good move by the Canadian government but, instead of banning it, they should have an education drive that it's highly risky, and their citizens before engaging in it must be aware of the risk.
Because no doubt that there are also traders that makes a lot of money through those and those that don't make money obviously don't know how it works, they've just overheard it from someone that it makes a lot of money but it's not easy.

Even if they spread awareness about this one, many will still become more greedy and will still try leverage trading so I think the best solution is really to stop it. There’s a lot of issues on futures trading as well, many got liquidated instantly and maybe this is the way of the government to prevent you from losing that much.

There’s always a risk in trading but banning it is like telling your people not to get their freedom on choosing where to spend their money. If the government wants to help the traders or anyone who are willing to trade then they should educate them and let them decide if they will still push this through or will stop doing it. Futures are more profitable if you are already familiar with it, so banning that option might prevent you from getting more profit.

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Quote from: blockman on December 17, 2022, 03:07:13 PM

I think it's a good move by the Canadian government but, instead of banning it, they should have an education drive that it's highly risky, and their citizens before engaging in it must be aware of the risk.
Because no doubt that there are also traders that makes a lot of money through those and those that don't make money obviously don't know how it works, they've just overheard it from someone that it makes a lot of money but it's not easy.

Even if they spread awareness about this one, many will still become more greedy and will still try leverage trading so I think the best solution is really to stop it. There’s a lot of issues on futures trading as well, many got liquidated instantly and maybe this is the way of the government to prevent you from losing that much.

Cryptomultiplier

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The Government move is quite considerate. The FTX saga is one big revealed truth that exits in the crypto world and to act before a likely incident occurs again. Leverage and margin trading is such that one enters a consensual debt with his/her broker. If one loses while trading and unlike what FTX turned out, I don't need stress or emphasize on how much indebtedness and downward spiral of the economy that would become.

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I think it's a good move by the Canadian government but, instead of banning it, they should have an education drive that it's highly risky, and their citizens before engaging in it must be aware of the risk.
Because no doubt that there are also traders that makes a lot of money through those and those that don't make money obviously don't know how it works, they've just overheard it from someone that it makes a lot of money but it's not easy.

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Quote from: pixie85 on December 14, 2022, 05:33:28 PM

Quote from: Oshosondy on December 13, 2022, 10:25:35 AM

It is because they want to protect Canadian investors, we all understand that, but if I am a Canadian, I will not like that after gaining experience from leverage trading over years now. But leverage trading is truly riskier.

I don't understand that. How do you protect people from their own mistakes? According to them it's by taking away all tools that can hurt them. Why don't they ban loans then?

Margin trading is based on lending traders money they don't have so they can take a market position. The same can be done on other markets like when you take a loan to buy a bankrupting company. You're technically margin trading just in a different environment.

What about gambling? Are they going to ban it too? Let's also ban alcohol because drunk traders can forget to set stops.

And that is the thing, while it may seem like a sensible choice for some the truth is that you cannot protect people from themselves, and while there is little doubt that leverage trading is more risky than trading without using leverage, at best they are just delaying the inevitable since those people will keep trading and losing their money against better traders, besides I doubt they banned leverage trading for stocks or other financial instruments so it should be obvious this is a veiled attack against this market.

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Quote from: teosanru on December 15, 2022, 02:57:02 PM

To be honest I cannot blame the Canadian Government on this. Even though everyone has their own liberal choice on whether or not they want to trade crypto, whether or not they want to do leverage trading. But if such big exchanges will collapse like this you cannot expect the governments to keep quiet and do nothing about it. It obviously not only shatters the trust of the people on the Crypto ecosystem but markets as a whole as well. And Margin trading is the biggest reason why these exchanges end up doing such scams and embezzlement with user funds.

Its not about those margin and futures trading but rather it do always boils or falls down on exchange legitimacy on which this is something that cant really be assured or something that it is really hard to guess on.
Its true that government cant really just sit down and just let these things slip away and the first they would really be considering is to protect their citizens about these things.
Government would really be always having the hindrance and make out warnings on dealing up with these things.It is really just surprising that canadian government would really be coming
up with this kind of ban which i dont see for it to be bad either.

teosanru

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To be honest I cannot blame the Canadian Government on this. Even though everyone has their own liberal choice on whether or not they want to trade crypto, whether or not they want to do leverage trading. But if such big exchanges will collapse like this you cannot expect the governments to keep quiet and do nothing about it. It obviously not only shatters the trust of the people on the Crypto ecosystem but markets as a whole as well. And Margin trading is the biggest reason why these exchanges end up doing such scams and embezzlement with user funds.

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Quote from: tvplus006 on December 15, 2022, 04:45:53 AM

Thus, the trader will need a larger deposit to trade the same volume. And to increase the deposit, the trader will have to use the services of a traditional bank in which he can take out a loan. After all, in fact, such a loan is not much different from the leverage provided by the cryptocurrency exchange.

Loan and leverage are very different in to the extent that loan can not replace derivative trading.

With leverage, you do not have to go for the inconveniences that banks will put you through, only what you just have to do is to make use of leverage, but the higher the liquidation price as the leverage increases.

You can close the position after a little period of time, unlike loan that will remain active unless you pay the interest along with the money. No interest paid with derivative trading, but the liquidation price become closer to the entry price.

You can still go with 2x leverage and think with right mindset, unlike someone that borrowed money from bank that will be having bad mindset because he is thinking of a way to return the money borrowed which might lead to a significant loss and that is a problem for him.

People will not think to borrow from bank to trade if compared to how people are using derivative trading today. People use derivative trading, their money can get liquidated, but no issue of payimg anything back, unlike bank.

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Quote from: Oshosondy on December 13, 2022, 10:25:35 AM

After United States, now Canada. No magin, perpetual or future trading again on exchanges in Canada as Canadian Securities Administrators (CSA), the council of Canada’s provincial and territorial securities regulators, on Dec. 13 issued an update to crypto trading platforms operating in the country...

Thus, the trader will need a larger deposit to trade the same volume. And to increase the deposit, the trader will have to use the services of a traditional bank in which he can take out a loan. After all, in fact, such a loan is not much different from the leverage provided by the cryptocurrency exchange.

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Quote from: pixie85 on December 14, 2022, 05:33:28 PM

I don't understand that. How do you protect people from their own mistakes? According to them it's by taking away all tools that can hurt them. Why don't they ban loans then?

Margin trading is based on lending traders money they don't have so they can take a market position. The same can be done on other markets like when you take a loan to buy a bankrupting company. You're technically margin trading just in a different environment.

What about gambling? Are they going to ban it too? Let's also ban alcohol because drunk traders can forget to set stops.

Yes, I'm annoyed with this decision. but it is an effort that at least at the moment can protect investors or traders from Canada. although I also don't know if traders from Canada will also like this or even be angry with the decision.

the impact that may be felt is of course on exchange companies in Canada. as long as there are exchanges that are still operating and that can provide access for traders and investors in asset management, they can still be active.

for gambling and alcohol. I don't think it will be treated the same way. government control may be easier than in this case.

tbct_mt2

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Quote from: jaberwock on December 14, 2022, 03:42:00 PM

Instead of complaining , we must still be thankful because they only banned those features and not the entire crypto.

There will be some features for cryptocurrency market will be eliminated by governments. There will be more regulations on cryptocurrency market. There will be more enforcement on tax in cryptocurrency market. Fortunately, I believe strongly that cryptocurrency market will be here, not be eliminated.

Quote

And like you said, crypto will still be functional even without those. This is great actually so that no more newbies are going engage directly on them because they are riskier than the basic ones. Now they can expect less losses from those who engage in cryptos.

It helps to save more people who are not knowledgeable but over greed. It helps to reduce panic sells and big red candles because of forced liquidations.

After suffering serious loses, people might have deeply serious disorders mentally that are barriers to keep them in the market or return in future. If we can prevent it at start for cryptocurrency newbies, it is good or at least not harmful for them.

Quote

Before Canada, it is said that US already did the same move, so don't be too confident and say that it didn't happened on others because there is a big possibility that they will be next on the list but again there is no need to worry as cryptos and its other features are still running continuously.

Before it is really applied, I consider it is a fake news or at least a fud news.

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Quote from: Oshosondy on December 13, 2022, 10:25:35 AM

It is because they want to protect Canadian investors, we all understand that, but if I am a Canadian, I will not like that after gaining experience from leverage trading over years now. But leverage trading is truly riskier.

I don't understand that. How do you protect people from their own mistakes? According to them it's by taking away all tools that can hurt them. Why don't they ban loans then?

Margin trading is based on lending traders money they don't have so they can take a market position. The same can be done on other markets like when you take a loan to buy a bankrupting company. You're technically margin trading just in a different environment.

What about gambling? Are they going to ban it too? Let's also ban alcohol because drunk traders can forget to set stops.

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Quote from: tbct_mt2 on December 14, 2022, 06:18:21 AM

Did Canada ban leverage, margin tradings for stocks, forex?

If they did not have these bans on other markets, it does not reasonable to ban these trading types in cryptocurrency market.

Cryptocurrency market won't die if it does not have margin, leverage, future tradings and it is only unverified news from Canada. Even Canadian government go far like this, it is only one nation on Earth. There are more other countries allow margin, leverage, future tradings in cryptocurrency market.

China ban Bitcoin mining, ok move to other countries.
Gambing is illegal in one nation, ok gambling company moves to and register their license in countries which accept gambling.

Instead of complaining , we must still be thankful because they only banned those features and not the entire crypto. And like you said, crypto will still be functional even without those. This is great actually so that no more newbies are going engage directly on them because they are riskier than the basic ones. Now they can expect less losses from those who engage in cryptos.

Before Canada, it is said that US already did the same move, so don't be too confident and say that it didn't happened on others because there is a big possibility that they will be next on the list but again there is no need to worry as cryptos and its other features are still running continuously.

tbct_mt2

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Did Canada ban leverage, margin tradings for stocks, forex?

If they did not have these bans on other markets, it does not reasonable to ban these trading types in cryptocurrency market.

Cryptocurrency market won't die if it does not have margin, leverage, future tradings and it is only unverified news from Canada. Even Canadian government go far like this, it is only one nation on Earth. There are more other countries allow margin, leverage, future tradings in cryptocurrency market.

China ban Bitcoin mining, ok move to other countries.
Gambing is illegal in one nation, ok gambling company moves to and register their license in countries which accept gambling.

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Quote from: hmadh411 on December 13, 2022, 08:18:36 PM

Huh they just don't like the ppl earn money
And they just angry that ppl are getting rich and they can't stole that money Grin

It is not beyond exchanges in Canada. Canadians can register on the foreign exchanges to make use of leverage in trading. But maybe sooner or later, the regulators can just want it to be like it is in US today, but not for now and maybe not.

Quote from: adaseb on December 14, 2022, 12:29:08 AM

However Coinbase, Gemini, Coinsquare, Crypto.com, they don’t have any type of margin or leverage trading available. This I guess is why everybody used Bitmex and then moved to FTX.

I can remember that Coinbase had margin trading before but removed it to comply with US regulator if I remember correctly. It is a law in US for exchanges not to have leverage trading.

adaseb

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How many exchanges in Canada or even for USA allowed margin trading? I think Kraken was the only one because it used a small margin pool, usually during periods of strong bull/bear trends it was always our or margin. That’s why it’s was allowed.

However Coinbase, Gemini, Coinsquare, Crypto.com, they don’t have any type of margin or leverage trading available. This I guess is why everybody used Bitmex and then moved to FTX.

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I do not believe 100% that the Canadian government cares about the funds of its investors. They are just using Ftx as an excuse to do what they want concerning regulating cryptocurrency. Also, I think that not all of Canada has done that.

Because if their entire country has a different cryptocurrency, poor citizens who believe in crypto, will have a problem in terms of concerting their profit to their fiat anyway.

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Everything that authorities does nowadays is relating it to FTX collapse. But this is somehow good for it only make investors accumulate BTC and not pull down the price by manipulators who just want to liquidate the traders who go long. I think this will make BTC prices go up while regulation is coming. Isn't binance.US registered in Canada?

GreatArkansas

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Quote from: hmadh411 on December 13, 2022, 08:18:36 PM

Huh they just don't like the ppl earn money
And they just angry that ppl are getting rich and they can't stole that money Grin

Trading with leverage is extremely risky, there are some people especially those new people who just started to trade a cryptocurrency can easily do this without any requirements, but it's risky for the people.
And additionally, that's why these centralized exchanges with margin trading/leverage can easily make their customer do trading without any proper introduction or requirements and I think it's intended or these exchanges are happy because of trading fees.

Overall, I don't think so this will affect Bitcoin or cryptocurrency itself because this regulation is about the centralized exchange, nothing to worry about if you are not doing any leveraged trading or margin trading.

hmadh411

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Huh they just don't like the ppl earn money
And they just angry that ppl are getting rich and they can't stole that money Grin

noorman0

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This is still somewhat liberating as long as there are no penal consequences for users as well to use high-risk trading types, including using a VPN to access the platform. In my mind, "Want to protect the investor" means no longer wishing to protect the investor from the risk of leveraged trading. The impact of FTX seems to be giving them a headache receiving lots of user complaints demanding protection.

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Quote from: Oshosondy on December 13, 2022, 10:25:35 AM

After United States, now Canada. No magin, perpetual or future trading again on exchanges in Canada as Canadian Securities Administrators (CSA), the council of
It is because they want to protect Canadian investors, we all understand that, but if I am a Canadian, I will not like that after gaining experience from leverage trading over years now. But leverage trading is truly riskier.

I don't think any Government or authority would really care about protecting funds of their Citizens. It's always just about trying to gain control. Most Governments see cryptocurrencies and rogue unregulated exchanges as a threat to their power when more people start using them. Unfortunately, very many scammers lurk in the same waters too and with the very sad events of scams and hacks, the Government finds an excuse of banning cryptos or the crypto exchanges and their services.

Quote from: Oshosondy on December 13, 2022, 10:25:35 AM

Hope Canada is not like US that traders can not use foreign exchanges?

They already have a list of banned exchanges, though not yet so big. It's Kucoin and Poloniex, so I believe such exchanges would reject Canadian KYC verified customers to use their platforms.

jackg

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I don't think they've gone that far yet and they probably won't (Re segregating their market from the world like the US does).

I think this might protect Canadian investors from a lot of insider manipulation and other things that likely goes on at these exchanges (as well as protecting investors from poorly balanced companies).

It might allow the sector to open up a bit though too, it'd be possible to make a dex with advanced futures trading that was fully decentralised and that would be much better for traders as they could see how much funds are available and how safe their funds actually were on the platform.

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After United States, now Canada. No magin, perpetual or future trading again on exchanges in Canada as Canadian Securities Administrators (CSA), the council of Canada’s provincial and territorial securities regulators, on Dec. 13 issued an update to crypto trading platforms operating in the country.

https://cointelegraph.com/news/canada-bans-crypto-leverage-and-margin-trading-after-ftx-collapse

Quote

According to the statement, all crypto trading firms operating in Canada — both local and foreign ones — have to comply with newly expanded terms, which ban them from offering margin or leverage trading services to any Canadian clients.

https://www.securities-administrators.ca/news/csa-provides-update-to-crypto-trading-platforms-operating-in-canada

Quote

Even with the adoption of these measures, crypto assets or financial products relating to crypto assets are high-risk investments. These risks could result from, among other things, crypto trading platform non-compliance with registration terms and conditions or undertakings, interconnectedness within the crypto sector, insolvency, hacks, price volatility and uncertain value propositions for individual assets. Canadian investors are urged to exercise caution and consider seeking advice from a registered investment advisor before investing in crypto; if they choose to pursue such an investment, despite all known risks, they should use a platform that is registered with CSA members.

It is because they want to protect Canadian investors, we all understand that, but if I am a Canadian, I will not like that after gaining experience from leverage trading over years now. But leverage trading is truly riskier.

I hope this would not go beyond the exchanges in Canada while Canadians should still be able to access other exchanges that offers leverage trading.

Hope Canada is not like US that traders can not use foreign exchanges?

Topic: Canada bans crypto leverage and margin trading after FTX collapse (Read 214 times)