Cryptocurrency Exchange Coinbase starts margin trading today. In margin trading, you can trade with leverage. But it works both ways – margin trading can multiply your profits and your losses.
Margin trading will be available on Coinbase Pro, the company's exchange interface for educated investors. Both private and institutional investors can submit margin trading orders with up to 3 times leverage. It works with any pair of assets with USD as the base currency.
It is currently limited to 23 states if you are a retail investor. However, institutional investors in 45 countries and 9 international countries can access margin trading.
There are many possible use cases for margin trading. For example, you can assign a tiny portion of your portfolio to a margin trade order to hedge across multiple positions. Coinbase believes that liquidity is sufficient to help investors build sophisticated margin trading orders.
If you are a private customer living in one of the 23 states where margin trading is available, you may not be able to use it. The company wants to limit margin trading to the most advanced traders.
Coinbase will track your past activity on Coinbase Pro and review trades, balances, deposits and withdrawals. If you are an active trader, you can access margin trading.
Here is the list of 23 U.S. states with retail margin trading: FL, TX, IL, NJ, VA, GA, AR, AK, OR, CT, NH, MA, NE, NC, OK, CO, KS, ME, SC, UT, WI, WY and WV.
Disclosure: I have small amounts of different cryptocurrencies.