A recent report revealed that Japanese cryptocurrency exchanges are steadfastly advocating for the ease of restrictions on margin trading with confidence despite the worldwide digital-asset market crash last year.
As per the Japan Virtual & Crypto Assets Exchange Association (JVCEA), there is a strong desire among industry participants to allow retail investors leverage of four to 10 times, which is higher than the current limit where customers could only double their exposure through borrowing.
In a recent interview, JVCEA Vice-Chairman Genki Oda asserted that the leverage reforms would enhance the potential of Japan for crypto entities, commenting, “Reforming the leverage rule could make Japan more attractive for crypto and blockchain companies.”
Oda added that implementing this measure would serve as a catalyst for increased trading activity. It has been reported that digital-asset exchanges in the country are actively engaging in discussions to establish a consensus on the proposed leverage limit.
The JVCEA Vice-Chairman stated that these exchanges are considering presenting their proposal to the Financial Services Agency (FSA) as early as next month. As the proposals are presented, regulatory authorities would reportedly assess them with careful consideration of market risks and the protection of investors. Revisions to margin trading limits would undergo comprehensive evaluations and consultations with industry stakeholders.
According to an FSA official, cryptocurrency platforms are required to provide justifications for relaxing margin trading restrictions, demonstrating how such changes would contribute to the government’s objective of fostering growth in blockchain-based sectors.
The official also mentioned that the agency expressed its willingness to engage in discussions regarding this matter with digital asset firms. Advocating for revised margin trading caps is meant to attract a broader range of traders, including institutional investors, and improve market liquidity. The JVCEA stated that higher leverage would allow traders to effectively manage their positions.
Notably, last month, a local media outlet reported that the Japanese parliament has decided to implement stricter cryptocurrency anti-money laundering (AML) measures starting this month. Further, the implementation of the “Travel Rule,” which requires personal identity revelation of the customer if a threshold is passed, is a vital aspect that ensures more precise monitoring of illicit gains.
