Binance, the world’s largest cryptocurrency exchange by trading volume, does not have leverage. This may come as a surprise to some, as many other exchanges do offer leverage. So why doesn’t Binance?
The answer likely has to do with risk management. Binance is a centralized exchange, which means it is custodial.
This means that Binance holds the keys to its users’ accounts and has the ability to freeze or reverse transactions. As such, Binance is able to control the amount of risk its users are exposed to.
NOTE: WARNING: Trading with leverage on Binance is a risky endeavor. Leveraged trading enables traders to take larger positions with a smaller capital base, but it also amplifies risk and losses. As such, you should only trade with money you are willing to lose, and ensure that you understand the risks associated with leveraged trading before committing any funds.
Leverage, by its very nature, amplifies risk. By offering leverage, an exchange would be increasing the amount of risk its users are exposed to.
Given that Binance is already taking on a lot of risk by being custodial, it makes sense that they would want to limit their exposure by not offering leverage.
This isn’t to say that Binance will never offer leverage. It’s possible that they may eventually offer it as an optional feature for users who want to take on more risk.
But for now, Binance does not have leverage.
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