US cryptocurrency exchange Coinbase Pro announced today that as of Wednesday, clients will no longer be able to use margin trading on the platform.

According to the Coinbase Blog, Chief Legal Officer Paul Grevall stated that new margin trading will not be allowed as of 9:00 PM. On November 25. 14:00 Pacific Time. The exchange said it would close the product in December “when all the positions on the margin expire”.

“We believe that clear and reasonable rules for margin lending products are essential to protect and preserve US clients,” said Grevall. “We look forward to working closely with regulators to achieve this goal.”

Grewal said the move was in response to “new directives from the Commodity Futures Trading Commission,” also called CFTC. In March, the committee clarified its position on “physical delivery” of assets, including cryptocurrencies purchased using leverage or other methods. The CFTC policy was to have a 28-day deadline for physical delivery so that buyers can use all digital assets purchased after that period.

When participants trade futures contracts in the traditional markets, they are betting on the future price behavior of the underlying asset. If they hold these futures contracts for the duration of the settlement, they end up with an underlying asset that is actually delivered to them. However, CFTC policy emphasizes that for digital assets, the parties selling tokens and those who act as brokers, including Coinbase, will have no control over the cryptocurrency used for margin trading when it is delivered to the client.

It is unclear what impact this move will have on the markets, but some experts indicate that it may dampen recent price increases.

The announcement came on the same day Coinbase announced that it would no longer use Form 1099-K to report cryptocurrency activity to the IRS. This payment method was intended for Coinbase users who made more than 200 transactions and $ 20,000 annually, but it did not include accurate reports on the underlying value and fair market value of the cryptocurrency investment.

Coinbase announced that it will use Forms 1099-MISC to provide tax information to customers who have received $ 600 in cryptocurrencies “from Coinbase Earn, USDC Rewards and / or Staking by 2020.” However, tax forms will not be issued to users who are not US citizens who reside outside the country.

Source: CoinTelegraph

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