The only major exchanges to provide US customers with margin trading are Kraken and FTX.US. Both have capital standards as well as other criteria that must be met.
The following requirements are based on a provision of the Dodd-Frank Wall Street Reform and Consumer Protection Act that requires a margin participant in the United States to be an “Eligible Contract Participant” (ECP) as defined under U.S. law (Section 1a(18) of the Commodity Exchange Act).
On the other hand, while both Kraken and FTX.US are based on this legislation, Kraken’s margin trading criteria are considerably more stringent. This is due to the fact that FTX.US allows for customers who simply wish to hedge (as explicitly authorized by the act), whereas Kraken suggests a net worth of almost twice the required amount. This is where the difference between FXX.US and Kraken comes in. There’s a $1 million threshold (or $5 million as an individual) with FXX.US, whereas there’s a $10 million ceiling with Kraken regardless.
Given the above, this post will go through how to margin trade as a United States citizen with FTX.US because it will be useful for more people.
Other Margin Trading Choices: For global clients, FXX, Binance, and ByBit are top choices. While these are excellent options for margin trading in general, none of them accept US traders. CME crypto futures, DEXs, and options trading products like GBTC and ETHE provide different possibilities for leverage to US citizens. While these are excellent options, they are not conventional cryptocurrency exchanges (and any exchange with margin is theoretically subjected to the same minimal standards).
Kraken Ceased Offering Margin Trading to Retail Customers, Where Should I Trade? As of June 23, 2022, Kraken has stopped providing margin trading to regular consumers. If you’re a Kraken user without access to margin, check out FTX.US because of their somewhat less stringent rules.
Using a VPN to Margin Trade: Some US residents have utilized VPNs to gain access to crypto exchanges in the past and margin trade there. However, by 2021, exchanges have really tightened restrictions on margin trading for accounts that haven’t KYC’d. Even if they don’t, they usually have smaller withdrawal limits than other countries’ institutions, making it nearly impossible for many traders to try to get around the rules. To add to that, it’s now illegal to use a VPN to trade on an US exchange. So, while this was an option in the past, it is no longer recommended and we do not condone it.
