Introduction
Cross collateral (also called cross margin) is a system that lets you use several assets simultaneously as collateral for your positions. Instead of converting your whole balance to USDC before trading, you can pledge your existing Bitcoin or ETH directly.
The difference with traditional exchanges is significant: on some platforms you must convert everything to USD or USDC first, causing conversion fees and taxable events. Cross collateral avoids this.
What is cross collateral?
Cross collateral is a risk-management and margin system in which the collateral behind all your open positions forms one shared pool. Rather than each position requiring its own margin, your entire balance backs all trades at once.
Simply put: if you hold 1 BTC, 10 ETH and 5,000 USDC, all three can back your open trades. Nothing needs to be converted to open a position.
How does it work in practice?
Say you hold 10 ETH worth €30,000 and want to open a €50,000 BTC long at 10x leverage.
- Without cross collateral: sell ETH into USDC first (fee + taxable event), then open the trade with USDC as margin.
- With cross collateral: open the trade directly. Your ETH stays your ETH and serves as collateral.
Result: no sale, no conversion fees, no extra taxable step. See Capital efficiency explained for the broader context.
Cross collateral vs isolated margin
| Aspect | Cross collateral | Isolated margin |
|---|---|---|
| Collateral | Shared pool | Per position |
| Risk | Positions can liquidate together | Each isolated |
| Capital efficient | Yes | No |
| Best for | Active traders, hedging | Beginners, single trades |
Which assets are accepted?
It varies per exchange. Common examples: USD / USDC / USDG / USDT, BTC, ETH, SOL, and EUR (at MiCA/EMI-licensed venues). Advanced exchanges also accept tokenised assets such as gold (PAXG) and, in some cases, even real stocks as collateral.
What are collateral haircuts?
Every asset carries a "haircut" — a percentage discount on its collateral value to absorb volatility. A real-world example (July 2026): USD counts at 100%, BTC/ETH/SOL at 95%, XRP and gold (PAXG) at 80%, mid-caps at 70%, real stocks (MU, SPCX) at 50%, small tokens as low as 25%.
So 1 BTC worth €60,000 counts as €57,000 of collateral at a 95% weighting.
Benefits for traders
- No unnecessary conversions — no need to sell crypto to trade.
- Tax efficient — fewer taxable events.
- Higher capital efficiency — more buying power from the same balance.
- Auto-hedging — long spot + short perp on the same asset can neutralise risk with minimal extra collateral.
- No yield loss — you keep earning on yielding assets; some exchanges even pay Yield on collateral explained.
Risks
- System risk — one heavy loss can hit your whole portfolio.
- Collateral volatility — if BTC backs your position and BTC crashes, you lose twice.
- Complexity — less suitable for beginners.
Frequently asked questions
What happens if one position gets liquidated?
The exchange first sells enough of your combined collateral to cover losses. Other positions close only if collateral runs out.
Can I disable cross collateral per position?
Usually yes — you can choose isolated or cross margin per trade.
Is cross collateral the same as portfolio margin?
Portfolio margin is an advanced form using risk models (e.g. Value-at-Risk). Cross collateral is the broader term.