• At present, customers may only borrow twice as much as they are risking.
• Regulators in Asia have been seeking to introduce crypto-friendly policies.

Industry participants seek to allow leverage of four to 10 times for retail players, according to the Japan Virtual & Crypto Assets Exchange Association (JVCEA). Customers may now only borrow twice as much as they are risking.

Regulators in Asia have been seeking to introduce crypto-friendly policies to allow more enterprises in the sector. Japan’s government is preparing to ease margin trading restrictions.

According to Vice Chairman Genki Oda of the Association:

“Reforming the leverage rule could make Japan more attractive for crypto and blockchain companies.”

He further argued that this would lead to more market activity. Japanese cryptocurrency markets are already in discussion over proposed leverage criteria. They will most likely go on to present their plan to the Financial Services Agency (FSA), Japan’s preeminent financial watchdog.

To further the government’s goal of developing blockchain-related industries, an FSA official has said that cryptocurrency firms must provide convincing arguments in favor of lowering margin trading limitations. The FSA is open to talking to companies dealing with digital assets about this.

This news comes as Hong Kong is ramping up its efforts to cement its position as Asia’s crypto powerhouse. Therefore, Japan is considering relaxing some of its crypto regulations on token listing and taxes.

Leverage of up to 25x on Japanese cryptocurrency exchanges led to massive margin trading volumes of roughly $500 billion in 2020 and 2021.

In 2022, however, volumes dropped by 75% as a result of a ceiling of two times leverage imposed by the Financial Services Agency (FSA). The goal of this action was to shield investors from major losses and curb excessive speculation.