Japan considers increasing leverage in crypto trading


The Japan Virtual Currency Exchange Association (JVCEA) intends to FSA increasing the maximum leverage from 1:2 to at least 1:10. Writes about it Bloomberg.

In an interview with the agency, the vice chairman of the association, Genki Oda, said that the implementation of the initiative will make Japan “more attractive for crypto and blockchain companies, and will also stimulate the expansion of trade.”

The promoted revision of restrictions was explained by the desire to expand the investor base and increase the liquidity of assets. The current restrictions hinder the development of the market and are a barrier to the entry of new participants, the JVCEA noted.

In 2020-2021, when the leverage could reach 1:25, the annual trading turnover of local platforms exceeded $500 billion. After the decision to limit this parameter to 1:2, the volume of transactions collapsed by 75%. The regulator then explained the move as a desire to protect investors from increased losses amid the collapse of FTX.

Oda expects the FSA to evaluate the proposals in July, taking into account market risks and customer protection opportunities. Any changes to margin trading limits will be subject to careful analysis and consultation with industry participants.

Recall that in January 2023, the FSA turned to global regulators with a proposal to treat the cryptocurrency industry as strictly as banks.

On June 1, the so-called “Travel Rule” came into force in Japan from FATFinvolving monitoring VASP transactions with digital assets in order to AML.

Earlier, the country’s authorities amended six laws on foreign exchange in the framework of combating money laundering.

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