SNEAK PEEK
- Japanese crypto exchanges urge for higher margin trading limits.
- Relaxed regulations could attract more crypto-blockchain companies.
- Crypto market showing signs of recovery despite 2022 crash.
Japanese cryptocurrency exchanges are making a strong push for looser margin trading regulations. Despite the global digital-asset market turmoil of the past year, these industry representatives remain committed to their goal.
Per reports, they are advocating for the existing cap on leverage for retail investors – currently at two times – to be increased to four to ten times, says the Japan Virtual & Crypto Assets Exchange Association (JVCEA).
On the same accord, Genki Oda, JVCEA’s Vice Chairman, believes that revising the leverage rule could turn Japan into a more appealing destination for crypto and blockchain enterprises. Additionally, he claims that such changes would promote more active trading.
With a consensus on the proposed leverage limit in the pipeline, the association plans to approach the Financial Services Agency (FSA) with its proposal as early as next month. The FSA, on the other hand, maintains a cautious stance. It has expressed that cryptocurrency firms must present compelling reasons for increasing margin trading limits.
Moreover, they must demonstrate how such a change aligns with the government’s aim of expanding blockchain-based industries. Based on reports, the FSA is willing to discuss this issue with digital asset businesses.
Historically, Japanese crypto platforms could offer up to 25 times leverage, stimulating margin trading volumes of approximately $500 billion in 2020 and 2021. However, introducing a two-times limit by the FSA in 2022 led to a significant 75% reduction in these volumes. This move aimed to check rampant speculation and protect investors from exaggerated losses.
In addition, Oda assures that Japanese exchanges possess the necessary tools to aid investors in managing the risks associated with margin trading. Nevertheless, he concedes that any relaxation in leverage regulations will not likely materialize before 2024.
In conclusion, the aftermath of last year’s global crypto market crash is still evident. However, there’s a hint of recovery with a 33% rebound in an index of the largest 100 crypto coins this year. As the landscape shifts, the proposed changes in Japan’s crypto regulation could mark a significant turn in its digital asset industry’s growth trajectory.
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- Source: https://investorbites.com/crypto-boost-japans-crypto-exchanges-advocates-looser-margin-trading-rules/
