Collateral Haircuts Introduced by Binance

Binance announced it will introduce collateral haircuts via Binance Margin for all borrowable assets on Cross Margin.

The collateral haircuts will not open immediately, with the full impact of the new ration valuation mechanism coming on January 12, according to the announcement from January 5. The collateral value will be the basis of determining the maximum borrow and transfer-out amounts of each user.

“Binance Margin will determine the maximum borrowing amount and maximum transfer-out amount of each user on Cross Margin based on their collateral value, which is the USDT-equivalent value of all assets in a user’s Cross Margin account after factoring in the relevant collateral ratios,” the announcement reads.

The new collateral haircuts are being implemented as a part of new risk control measures. Collateral haircuts appear when the collateral asset is valued lower than the requested loan amount by the respective financial institution.

What is Binance:

Binance positions itself as the world’s leading blockchain ecosystem and crypto-asset infrastructure provider with a financial product suite that includes the largest digital asset exchange by volume. The Binance platform aims to increase the freedom of money for users and features a comprehensive portfolio of crypto-asset products and offerings, including trading and finance, education, data and research, social good, investment and incubation, decentralization, and infrastructure solutions.

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