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It’s about controlling risk. Think of 2007/2008 bank collapse when they played with fire and were leveraged 30 to 1.
by e9 6y ago
It’s about controlling risk. Think of 2007/2008 bank collapse when they played with fire and were leveraged 30 to 1.
- seibelj 6y agoMy company offers 100 to 1 leverage. But no US customers allowed, of course. We target professional traders.
- arcticbull 6y agolol, sounds like you target professional gamblers. I would say the same of many forex and futures traders (myself included) - and of any other bucket shop like eToro and IG - though. By the way, the term 'bucket shop:' "Historically, the term was used to refer to firms that allowed their customers to gamble on stock prices, often using dangerously high levels of leverage."
- jzwinck 6y agoProfessional traders know not to use brokers offering insane leverage because of the risk the broker will be wiped out. Do you have a way to protect one customer's funds when another customer is ruined?
- seibelj 6y agoAll major offshore exchanges offer 100 to 1 leveraged crypto futures - it is table stakes for the industry. We have a lot of mechanisms plus an insurance fund to protect the system.
- hnracer 6y agoHigh leverage means less counterparty risk because the max loss is the capital residing on the exchange which is much less than the position size. As far as mechanisms there's auto deleveraging and insurance fund. Professional traders all wish to be on exchanges with high leverage because it means more volume is uninformed flow and therefore there is more alpha on the table. The pie is bigger.
- deleted 6y ago[deleted]
- hnracer 6y agoIt's not an apt analogy, these are standalone institutions without systemic ties to other parts of the economy, and someone who blows up crypto margin trading is only hurting themselves (or the insurance fund which is sunk cost anyway). Even if I grant the analogy, their original proposition is accurate. Regulations are the main reason why US exchanges are an incredibly small percentage of total crypto volume.