• Wed. May 22nd, 2024

Japan’s Crypto Exchanges Seek Less Stringent Margin Trading Rules

Leon Kramer

ByLeon Kramer

Jun 21, 2023

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Digital asset service providers in Japan want the authorities to relax their strict margin trading regulations to attract investors. The crypto exchanges argue that the less stringent guidelines will boost the margin trading sector in Japan.

Traders Eye Higher Leverage Limit

According to reports, the Japan Virtual and crypto asset exchange association (JVCEA), which self-regulates the Japanese crypto market, wants higher leverage limits for its members. The body revealed that its members are calling for 10x leverage limits of their capitals to attract new investors.

While speaking during a recent interview, Genki Oda, the Vice Chairman of JVCEA, expressed his belief that the decision could significantly enhance Japan’s appeal to crypto and blockchain enterprises. Oda points to its positive impact on fostering increased trading activities within the country.

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Highlighting the significance of crypto exchanges, Oda explained their ability to empower investors in effectively navigating and mitigating risks associated with margin trading positions. He also revealed the importance of bolstering risk management tools and enhancing investor education to achieve this goal.

The JVCEA executive said that discussions are underway regarding the leverage limit, and the final decision would be presented to the Financial Services Agency (FSA), Japan’s leading regulatory agency. Meanwhile, an anonymous FSA official disclosed that the government must request that crypto firms explain how the relaxation of margin trading caps aligns with its objective of supporting the growth of blockchain-based industries.

Japan’s Strict Crypto Stance

Amid the ongoing debates on the global crypto regulatory approach, Japan has consistently upheld stringent measures against digital asset trading platforms. Its regulatory action has played a vital role in ensuring the protection of customer funds at FTX Japan, shielding them from the aftermath of the collapse of its parent company.

Industry analysts believe the Japanese government’s approach also helped protect FTX Japan from the devastating contagion that affected several crypto exchanges last November. Meanwhile, Japan unveiled new crypto guidelines at the start of the month.

The guidelines mandate exchanges to share customer information as part of the ongoing crackdown on money laundering activities. However, a report by Nikkei Asia claimed that there are certain loopholes in implementing the new rule.

Therefore, its overall effectiveness is in doubt. Japan made significant strides in supporting the crypto industry last year.

Its first move was to lift the ban on foreign-issued stablecoins to enable a more inclusive approach to digital asset transactions. Furthermore, the country embarked on a pilot program for its central bank digital currency (CBDC), further showcasing its commitment to exploring innovative financial technologies in line with its economic policies.

Moreover, Japan’s support extends beyond traditional crypto assets, as the government has demonstrated a keen interest in advancing the metaverse and NFT-related space.

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Leon Kramer

Leon Kramer

Leon Kramer, a renowned financial author, enlightens Main Forex News readers with his deep understanding of currency markets. His years in global finance, combined with an intuitive grasp of trends, delivers insightful, up-to-the-minute foreign exchange analysis.

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