Exchanges Tighten Collateral Requirements Amid Market Shifts

Crypto exchanges have quietly made changes to their collateral requirements, potentially leaving leveraged traders with less room for error. Binance lowered the collateral ratio for six tokens on September 18, while Coinbase International Exchange will remove 29 assets from its eligible-collateral list on September 29.

The collateral ratio determines how much of an asset's market value an exchange recognizes for borrowing or margin calculations. A lower ratio means a trader can borrow less against the same amount of tokens. For example, if Binance lowers the ratio from 30% to 10%, a trader holding $100,000 worth of affected tokens would see their recognized collateral value drop by $20,000.

Binance adjusted its Cross Margin system, which affects the amount a customer can borrow or transfer out. The changes also affect Coinbase's derivatives system, where customers may need to add other collateral or reduce exposure depending on their individual margin position.