Top crypto traders use leverage trading as a potent weapon in their toolbox. But because of the stringent rules, many of the exchanges they use are not accessible to US citizens. This article will detail the exchanges that allow US cryptocurrency traders to trade with leverage.
Is leveraged crypto trading permitted in the US at all?
Margin trading is the practice of borrowing money from brokerage firms in order to engage in trading. Traders must first deposit money as collateral for the loan, and they must then pay interest on a regular basis. The trader’s buying power is increased by this loan aid. But engaging in this kind of trading is risky.
It is hazardous because, to put it simply, you could lose a lot more money than you invested. Let’s use a straightforward example: You had $10,000 in cash on hand, plus $10,000 that you borrowed, and you spent that money to purchase 2000 shares for $10 each. The entire investment, plus commissions and interest, is lost if the share price falls by 50%.
To be successful in this kind of trade, one must be well-versed in it and possess specialized expertise. On the other hand, and this isn’t meant to be unfavorable, money invested can yield substantial gains if it is invested wisely and moves are made. Therefore, it would be best to wait until you are prepared to start this business if you do not yet fully understand how margin trading works.
Since this form of transaction mostly refers to CFDs, which are not permitted in the USA, we must underline that trading margins are illegal there. However, as long as American residents don’t use leverage when trading American assets and their derivatives on trading platforms, it is acceptable. Brokers who deal in American derivatives, for instance, may have platforms outside of American boundaries and a license from, say, the UK’s FCA or other relevant authorities.
It is simpler to buy, trade, and store cryptocurrencies like BTC, ETH, KCS, SHIB, DOGE, and Gari, thanks to KuCoin, a safe cryptocurrency exchange.
You can adjust the leverage on KuCoin to 20x for ordinary assets (between 1x and 20x). Leverage can also be increased up to 100 times for well-known coins like Bitcoin and Ethereum.
Over 100 cryptocurrencies, including Bitcoin (BTC), Ethereum (ETH), Solana (SOL), Cardano (ADA), Ripple (XRP), Fantom (FTM), Polkadot (DOT), Terra (LUNA), ChainLink (LINK), Avalanche (AVAX), and many more, are supported by KuCoin Futures.
The maker-taker fee structure used by the KuCoin exchange is 0.02% for makers and 0.06% for takers.
Pros and Cons
- Low costs
- Mobile Application (Android and iOS)
- No mandatory KYC
- 10+ M users
- Not authorized in the US
- 2020 hacking
One of the first cryptocurrency trading platforms in existence was Kraken, which was established in July 2011 and is headquartered in the USA (California). This exchange is among the safest in the industry because Kraken has never been compromised. Over 4 million people utilize it globally. You can buy, sell, and exchange more than 90 different cryptocurrencies on it.
Kraken is accessible outside of the United States in more than 170 other nations. It is listed with FinCEN in the United States. Despite having a U.S. base of operations, this platform does not allow trading by residents of New York or Washington. It is a user-friendly exchange and the best platform for safe, quick, and secure transactions.
Trading pairs on Kraken can have the leverage of up to 5x. Due to this, US dealers might earn respectable profit margins.
You may trade more than 30 different cryptocurrencies using BTC, ETH, USD, or EUR. ADA, ALGO, AAVE, BCH, ATOM, DOGE, XTZ, and many others are a few of them.
This exchange has a maker-taker fee structure. On Kraken, fees might be as high as 0.26%. Additionally, there are fees for Opening (0.02%) and Rollover (up to 0.02% every 4 hours).
Note: US traders may retain open positions with Kraken for a maximum of 28 days. Imagine you miss the window of opportunity to close such a position. In that situation, Kraken will automatically liquidate your position without warning at the conclusion of the 28th day.
Pros and Cons
- Accessible practically everywhere
- Mobile Application (Android and iOS)
- Extreme security
- Multiple payment options
- Long account funding times
- Average fees
- No tax assistance
The cryptocurrency trading platform GDAX was introduced by Coinbase in 2016 and was relaunched as Coinbase Pro in 2018. Currently, the same business owns both Coinbase and Coinbase Pro, which are connected but independent platforms. Nevertheless, they are utilized by a variety of users and traders.
Traders who desire a cutting-edge trading environment and who wish to trade digital assets for profit should use Coinbase Pro. Previously, 23 US states—FL, TX, IL, AK, OR, CT, NJ, VA, GA, AR, NH, MA, NE, KS, ME, SC, NC, OK, CO, UT, WY, WI, and WV—could participate in margin trading on Coinbase Pro.
Margin trading was previously possible on Coinbase Pro, as seen above. Maximum leverage for US traders was 2x for the LTC/USD pair up to 500 USD, 3x for the ETH/USD and BTC/USD pairs with a cap of 10,000 USD, and 2x for the BTC/EUR pair up to 3,000 EUR.
Pros and Cons
- Low costs
- Decent liquidity
- Not using margin
- Customer service might use improvement
- Not suitable for beginners
Other VPN Exchanges (risky)
Most of the other exchanges with large leverage expressly forbid U.S. citizens, in contrast to KuCoin. Due to this, American traders look for other access points to such sites. And they utilize a VPN to accomplish this.
The U.S. trader can access the restricted platform while avoiding detection by utilizing IP addresses from nations that permit trading with high leverage. VPNs technically conceal both your location and your IP address. In addition, a VPN encrypts your internet traffic so that no one can determine your location, identity, or course of action.
Crypto dealers are rumored to employ VPN technology pretty frequently. Let’s examine three exchanges that Americans can use using a VPN currently (caution: this is very risky!).
Bybit was established in 2018, and it swiftly rose to the top of the fastest-growing cryptocurrency trading platforms. More than 2 million people are registered users. Currently, Bybit does not require KYC verification.
For four digital assets—Bitcoin BTC, Ethereum ETH, Ripple XRP, and EOS—the platform supports perpetual contracts. The degree of leverage on Bybit will vary depending on the derivative contract you want to trade. Leverage on the remaining three assets is limited to 50x by Bybit, compared to 100x for BTC/USD.
A maker/taker fee system is used by Bybit. Makers on Bybit don’t pay any trading commissions, in contrast to most other exchanges. However, they will receive a refund in exchange for supplying liquidity. Additionally, there are exchange levies fees for position funding.
With a daily trading volume of more than $15 billion since its launch in July 2017, Binance has grown swiftly to become the largest centralized cryptocurrency exchange in the world. It offers futures trading in more than 50 cryptocurrency trading pairs.
One of the highest levels of leverage in the crypto space is offered to Binance users. On BTCUSDT Perpetual, this platform allows maximum leverage of 125x. Leverage on other assets varies according to the item selected and the user’s tier. The flat trading charge and the tiered model are the two classes of Binance’s maker-taker fee structure.
Margex is a Seychelles-based cryptocurrency trading platform that was established in 2020. High levels of security, proprietary software to prevent price manipulation, a referral program, up to 100x leverage, and no KYC verification are some of the primary advantages of Margex. On the other hand, there aren’t many trading pairs available on this site. To be exact, there are just six trading pairings.
With USD, Margex offers trading pairings for the most well-known cryptocurrencies:
Leverage settings at Margex range from a minimum of 5x to a maximum of 100x. Margex also offers some of the lowest costs in the industry in an effort to entice traders. The maker/taker model is used to determine the fees.
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