Exchanges Squeeze Leverage for Traders Amid Collateral Rule Tweaks

Exchange operators Binance and Coinbase International have made significant changes to their collateral rules, affecting the borrowing limits of leveraged traders. On September 18, Binance reduced the collateral ratio for six tokens: AUCTION, BLUR, GALA, HYPER, S, and SYRUP, from 30% to 10%. This change means that a trader holding $100,000 of one of these assets would see their recognized collateral value fall by $20,000.

At the same time, Binance increased the collateral ratio for three other tokens: ARB, TAO, and WLD, from 50% to 60%. Coinbase International will remove 29 assets from its eligible-collateral list on September 29, including popular cryptocurrencies like BNB and AVAX.

The changes demonstrate that exchange-set collateral rules can tighten usable leverage independently of token prices. This means that even if the market value of a token stays the same, its contribution to a trader's borrowing limit or margin cushion may decrease significantly.