Japan's Financial Services Agency: Proposes to reduce leverage on crypto margin trading to less than double, or implement this spring

According to Cointelegraph, Japan's financial regulator, the Japan Financial Services Agency (FSA), has proposed reducing the leverage limit on cryptocurrency margin trading from 4x to 2x.

japan-4141578_960_720.webp

(Source: Pixabay )

On January 14, the Japanese Financial Services Agency announced the proposal in a Cabinet Office Decree (a legal document issued by the Japanese Cabinet Office).

If passed, this would be the first time the Japanese government has overseen the leverage ratio of cryptocurrency margin trading. According to Nikkei, Japan has not previously formulated similar rules.

According to reports, the Japanese Financial Services Agency plans to put the order into effect after the revised version of the Financial Instruments and Transaction Law comes into effect in April. In response to the proposal, the Financial Services Authority accepted public suggestions and comments by February 13.

Margin trading allows traders to use borrowed funds to increase potential returns. This is a high-risk investment because its losses may exceed the initial investment amount of the trader.

The Nikkei said the Financial Services Agency aims to protect investors from "risks of loss from excessive speculation and volatility."

Some people believe that clear margin trading regulations are imminent, as 80% of crypto trading is derivatives trading. According to data from the Japan Virtual Currency Trading Association, the official self-regulatory organization of the Japanese crypto industry, from April 2017 to March 2018, the volume of leveraged trading, margin and futures transactions in the crypto industry was much higher than that of spot transactions.

Last year, the Japan Virtual Currency Trading Association imposed a 4x ceiling on leverage, causing some cryptocurrency exchanges in the country (such as Coincheck) to reduce leverage. However, some economic experts have suggested that the ratio should be further reduced to 2 times in order to be the same as leverage in other countries such as the European Union.

We will continue to update Blocking; if you have any questions or suggestions, please contact us!

Share:

Was this article helpful?

93 out of 132 found this helpful

Discover more

Market

FTX may be approved to liquidate $3.4 billion worth of tokens this week. What impact will it have on the market?

FTX may obtain court approval for asset liquidation on September 13th. Under the pressure of 3.4 billion sell-off, th...

Opinion

Data Perspective on the South Korean Cryptocurrency Market Strong Growth of CEX and Obsession of Retail Investors with Altcoins

We will study data from centralized exchanges in Korea and explore the characteristics and trends of Korean investors.

Blockchain

Bloomberg Interview with He Yi: My relationship with CZ is that of a mentor, friend, and spouse.

He Yi referred to Zhao as a comrade-in-arms and also as a college roommate. She said that their relationship only beg...

Opinion

a16z evaluates the regulation of Web3 in the United States The regulatory situation is much more optimistic

This article analyzes and rates cases involving Coinbase, Uniswap, ZeroEx, OPYN, and Deridex, and finds that the regu...

News

Inventory of Seven Bills that Could Determine the Future of Cryptocurrency in the United States

Author | DL NEWS compilation | Garyma Wu said the original link of the blockchain https//www.dlnews.com/articles/defi...

Blockchain

Beginner's Guide | Why choose a highly liquid exchange?

Source: Medium Translation: First Class (First.VIP) Liquidity is the most important concept that everyone needs to un...