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Japanese Crypto Exchanges Rally For Softening Of Margin Trading Restrictions

Industry professionals advocate for leverage ranging between 4-10 times to invigorate trade and attract blockchain companies.

 Cryptocurrency exchanges in Japan are rallying for the softening of restrictions on margin trading, despite the tumultuous crash of the global digital asset market last year.

“We are advocating for the authorization of retail investors to employ leverage ranging between four to 10 times. Presently, investors can merely augment exposure by doubling through borrowing, according to Japan Virtual and Crypto Assets Exchange Association,” said a considerable number of industry professionals. 

“Reforming the leverage rule could make Japan more attractive for crypto and blockchain companies,” said Genki Oda the Vice Chairman of the association to Bloomberg  

He also posited that the revision would invigorate trading activities.

The country’s digital asset exchanges are engaging in discussions to converge on a unanimously agreed leverage limit and have plans to present their proposition to the Financial Services Agency (FSA) in the imminent future, potentially as early as next month.

Historically, Japan has been somewhat liberal in easing crypto regulations in areas such as token listing and taxation. However, the country is generally regarded as having stringent regulations with an emphasis on safeguarding investors.

This focus was evident when the Japanese division of the defunct FTX exchange managed to refund clients despite the ongoing U.S. bankruptcy proceedings.

Officials of the Financial Services Agency conduct search at Coincheck headquarters in Japan, after the Tokyo-based firm lost 530 million USD in cryptocurrency to hackers. The FSA is receptive to engaging in dialogue with digital asset enterprises.   AFP PHOTO VIA GETTY IMAGES

“Cryptocurrency companies need to put forth cogent arguments as to how loosening the reins on margin trading would align with the government’s objectives of bolstering blockchain-based industries,” said an FSA representative

There has been a significant decline in trading volumes on Japanese cryptocurrency platforms, which once permitted as much as 25 times leverage, resulting in an approximate $500 billion annual margin trading volume in 2020 and 2021.

The FSA, in a bid to temper rampant speculation and safeguard investors from magnified losses, imposed a two times leverage limit, which led to a 75% plunge in trading volumes by 2022

© 2023 Zenger Zenger News does not provide investment advice. All rights reserved.

Produced in association with Benzinga

Edited by Judy J. Rotich and Virginia Van Zandt

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