Coinbase Pro, the cryptocurrency trading platform arm of U.S.-based exchange Coinbase, has unveiled 3x margin trading for select customers.

"Our leverage multiple is based on marketplace analysis," a Coinbase spokesperson told Cointelegraph in an electronic mail. "Nosotros are rolling this out in a way that we feel is responsible to our customers while offer them an acceptable corporeality of leverage to trade on."

Active Coinbase Pro users in 23 states can now trade with leverage on Coinbase Pro, co-ordinate to the company's weblog announcement on Feb. 12.

Coinbase Pro hosts a small-scale 3x leverage limit, whereas exchanges such as BitMEX and Binance offer 100x leverage and up. "We volition monitor the market and client usage and plan to evaluate the feature on an ongoing bases," the Coinbase spokesperson said, responding to a question on the firm's potential futurity plans."

What is margin trading?

A product typically seen in professional nugget trading circles, margin trading substantially involves borrowing funds with which to merchandise on a per-trade ground.

Coinbase said its Pro exchange at present hosts 3x leverage, so users with one Bitcoin (BTC) tin can enter trades with three Bitcoin (2 borrowed BTC), resulting in amplified gains or losses, depending on the trade.

Who can use Margin?

Coinbase noted the feature is open for retail and institutional players. The substitution has restricted retail participation to residents of 23 states. Retail customers also must have business relationship records showing regular activity on the platform to qualify for margin.

On the institutional side, margin availability exists in 43 states and 9 other countries.

Why did Coinbase Pro remove margin years ago?

Rebranded from GDAX to Coinbase Pro in 2022, Coinbase'due south trading platform touted 3x margin trading capabilities for Bitcoin, Litecoin and Ethereum dorsum in 2022, as shown in a how-to tweet from the company.

The platform removed the feature, notwithstanding, in the months post-obit an Ethereum flash crash in June 2022, which dropped the asset from $317 downward to $0.10 in an instant. The Commodity Futures Trading Committee, or CFTC, also investigated the trading platform post-obit the crash.

When asked why the exchange removed the selection, the Coinbase spokesperson said:

"Several years ago, we had a different margin offer that we ultimately decided to sunset because information technology wasn't the right experience. Since then, nosotros've thought through the experience from first principles and built what we believe to be an exceptional user experience that'due south robust plenty to scale to the largest institutional users while simultaneously offer an great feel to retail users."

UPDATE February. 12, 21:54 UTC: This commodity has been updated with comments Cointelegraph received from Coinbase afterwards initial publication.