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The Bank for International Settlements (BIS) published a paper that examines decentralized finance (DeFi) leverage - ie the asset-to-equity ratio at the wallet level in major lending platforms. The overall leverage typically ranges between 1.4 and 1.9, while the largest and most active users consistently exhibit higher leverage than the rest. Leverage is mainly driven by loan-to-value requirements and borrowing costs, as well as crypto market price movements and sentiments. Higher wallet leverage generally undermines lending resilience, particularly increasing the share of outstanding debt close to being liquidated. Borrowers with high leverage are more likely to tilt towards volatile collateral when their debt positions are about to be liquidated.

Binance and FTX are reducing maximum leverage on offer to traders to 20 times, instead of 125 and 101, respectively. While crypto exchanges moved to rein in the most extreme use of the strategy, they are far from turning it off -- with 20-times leverage still higher than what's offered in standard U.S. stock-market accounts.

The planned end date for leveraged crypto trading is 12:00 on Friday, March 13, 2020, by which deadline all open positions should be settled. Customers will then have until the end of March 2020, to transfer any Japanese Yen balance in Coincheck's leverage account to their own trading accounts.

Estonia-based Bibox exchange is to launch bitcoin cash (BCH) and litecoin (LTC) perpetual trading contracts on April 12, with leverage of up to 50x. Priced in tether (USDT) the cryptocurrency derivatives are targeted at both institutional and retail investors.

"The move from $4k-$10k was based on a confluence of real factors (Yuan depreciating, the Fed, etc), but the move from $10k to $14k, and back to $10k and back to $13k, and back to $11k was all based on leverage."

On Sunday, BitMex had the most Bitcoin-related liquidations in three months, according to crypto derivatives tracker Skew. More than $190 million has been liquidated on the exchange in the last 24 hours, according to TokenAnalyst.io. BitMex offers as much as 100 times leverage on futures contracts, and when trades go bad, users are at risk of facing margin calls on what's borrowed that can end up leading to the liquidation of their position.

The Financial Services Agency of Japan issued crypto-asset related regulations for public consultation. They would impose a 2x leverage limit, which is stricter than the 4x leverage limit imposed by the Japan Virtual Currency Exchange Association, the industry's self-regulatory organization. It also includes a requirement for crypto-exchange to store more than 95 percent of its clients' assets in cold wallet. The consultation period would end by mid-February to be implemented by June 2020.

Silvergate Bank, a crypto-friendly lender that counts major crypto exchanges like Coinbase and Kraken as clients, is expanding its SEN Leverage service. The product, which was first launched in 2017, allows the bank's customers to obtain US dollar loans collateralized by their bitcoin holdings at some crypto exchanges that Silvergate is currently serving. To do so, Silvergate partnering with the digital asset custodian Anchorage, which recently raised $40 million in a Visa co-led series B fundraising.

Since crypto values plummeted last year, US lenders have been luring people with paper profits to leverage them into cash by borrowing against their hodlings. And because the IRS treats crypto money as a capital asset like stocks or property, not as a currency, there's no tax bill on the transactions.

Bitfinex started publishing real-time liquidation updates in preparation for the rollout of its new derivative product with up to 100x leverage, which is not uncommon, with BitMEX also offering it.

Futureswap is a decentralized exchange that allows traders to enter into perpetual futures with up to 20x leverage while liquidity providers can earn fees and interest. The platform is governed by the community, which is powered by an underlying governance (FST) token that allows anyone to propose new exchanges or changes in the system.

Crypto exchange OKEx is planning to launch Tether-based futures trading, offering a linear futures contract with leverage of up to 100x. The contract will have daily settlement and offers supported pairs with Bitcoin, EOS, Ether, Litecoin, Bitcoin Cash, XRP, Ethereum Classic, Bitcoin SV and Tron.

Binance's futures exchange is raising leverage to 125x with the launch of bitcoin (BTC)/tether (USDT) contracts today.

Since Black Thursday, ETH is still performing well and organic demand for leverage has only increased. However, DAI selling from leverage seekers could not offset the yield farming craze and on average DAI has traded at around $1.02. Potentially, market making activities also decreased due to lucrative opportunities from yield farming. Importantly, this all happened despite heavily increased debt ceilings, the onboarding of new collateral assets and 0% rates across the board. The issue is that all the conventional monetary tools at hand simply cannot compete with massive DAI demand from yield farmers and new price mechanics introduced by several AMMs like Curve.

This article spells out how to build a USD stablecoin legal basis by leveraging the core commercial law principles of (i) focusing on the principles of settlement finality, (ii) rules for adverse claims, (iii) discharge of the underlying obligation, and (iv) the concept of a security entitlement. It maps out how these principles are embodied under the U.S. commercial laws of investment securities (UCC Article 8) and of payments (UCC Articles 3, 4, and 4A). The goal in doing so is to show how innovators can incorporate novel, technology-driven market practices and business models into the existing financial law framework in a proven and effective way - how to leverage what is working today and does not need to be invented again. Awareness of the availability of these commercial law tools, and their limitations, can provide important help to stablecoin developers and market participants in managing their exposure, designing efficient financial innovations, and controlling the risk to the broader financial market.

The first debate of the 2020 U.S. presidential election had no clear winner, but crypto-powered prediction platforms are having a field day. Election futures on crypto derivatives exchange FTX boomed, with the platform's CEO reporting more than $4 million in open interest trying to pick the winner between Democrat Joe Biden, and Republican Donald Trump. Volumes on FTX are amplified by leverage. On predictive platforms that do not offer leverage, more modest six-figure volumes were recorded. Polymarket saw more than $100,000 in volume flow into its 'Will Trump win the 2020 U.S. presidential election?' market on September 30.

Banco Central dos Brasil (BCB) announced the start of a (wholesale?) central bank digital currency (CBDC) proof-of-concept (PoC) project aimed at providing payment rails executed on distributed ledger technology (DLT) to support the provision of retail financial services, including the purchase and sale of tokenized government bonds, settled through tokenized bank deposits. The PoC is not aimed at leveraging digital payments, as this is already being done on a large scale with Pix, which was launched at the end of 2021 and has been widely adopted.

The Bank for International Settlements published a paper on crypto futures carry, i.e. the difference between futures and spot prices, which can become very large (up to 60% p.a.) and varies strongly over time. This behavior is most consistent with the existence of a highly volatile crypto convenience yield that stems from two main forces: (i) trend-chasing and attention by smaller investors seeking leveraged upside exposure to crypto assets in boom periods, and (ii) the relative scarcity of "arbitrage" capital taking the other side through a cash and carry position. Engaging in the latter is risky due to spikes in margins and liquidations amid drawdowns. The interplay between these two forces, and the involved high leverage, may help explain why severe market crashes are a frequent feature of crypto markets.

"We examine the impact of a Central Bank Digital Currency (CBDC) on bank lending, emphasizing the role of different financial frictions. Within a stylized general equilibrium model, we integrate a banking sector characterized by market power on deposits and leverage constraints, together with liquidity in households' utility. Calibrating the model to US data and simulating a CBDC introduction as a shift in households' preferences for public money, our results indicate that a CBDC increases bank lending when market power is the primary operating friction in the banking sector. However, this outcome reverses when leverage constraints are binding for banks."

Binance has launched version 2.0 of its platform - a move that officially adds margin trading for its customers. Binance indicated that maximum leverage (the amount that can be borrowed against a user's crypto collateral) is 3x.