Binance has recently announced that the maximum limit for the cross-collateral loan for its future exchange is getting increased to $1 million. The USDT shortage is severe though for the loan.
Putting up collateral is a necessity for a willing better on the cryptocurrency’s future price for a futures exchange. This ties a contract on the future-value, future market very seriously to Tether (USDT) in Binance’s case, else usually it’s tied up to lending markets.
Binance, for its future markets, has increased its cross-collateral loans. Cross-collateral provides its users to use its first loan as collateral for its second one. The value has been raised to $1m and, with room for valid criticism. It adds another layer by providing loan on top of another loan in debt-based trading. Traders don’t fancy the practice provided it does have an element of risk involved.
The announcement of the same was made on Friday by Binance Futures.
— Binance (@binance) February 14, 2020
Binance Move, Bold or Bewildering?
Provided the amount is so high for a loan, its conspicuous Binance has faith in its capability to meet the demands of liquidity. This appears as an antithesis to reports saying that there’s a lack of USDT, and due to this, the users are getting prevented from taking margin trading loans. Ergo, this announcement regarding cross-collateral loan is generating curiosity.
Many traders have reportedly said that the scarcity of USDT on the said crypto-platform is hindering their loans attempts on Binance.
Although the decision of increasing the cross-collateral limit to $1 million is a welcome one, Binance should pay heed to the USDT issue too. Right now maybe it’s not a big hurdle, but with time, they might find that offering such financial services when USDT liquidity is running low, was not really the brightest of ideas.