Japan’s Financial Services Agency is reportedly considering to curb margin trading for cryptocurrencies in order to reduce speculative trading and reduce volatility risks. A 4-to-1 limit is already on the table.

Moving Fast

Yesterday, October 24th, the Financial Services Agency (FSA) of Japan allowed the cryptocurrency industry to regulate itself, putting the Japanese Virtual Currency Exchange Association (JVCEA) in the spotlight as a self-proclaimed regulatory body.

Earlier this year, the association proposed to curb margin trading in order to reduce the risk for investors due to high volatility.

It seems that the matter is currently a priority in the country’s regulatory agenda, as the FSA is reportedly considering to leverage caps under the abovementioned considerations.

The FSA is considering leverage caps on trading cryptocurrencies.

As it stands right now, the legislation of Japan requires cryptocurrency marketplace operators to register with the FSA. However, there are no regulations which govern the transactions themselves. As such, certain cryptocurrency exchanges would cap the leverage at 25 times the deposit which, for obvious reasons, can quickly cause a lot of damage.

An Issue Worth Looking Into

Asian Nikkei reports that about 80 percent of Japan’s cryptocurrency transactions, which have amounted to $613 billion in 2017, has been conducted through margin trading, citing the JVCEA.


Seven out of the total 16 FSA-registered operators currently provide margin trading options. The report also cites a lot of potential issues such as power outages which could cause a lot of hurdles when margin trading, even if small price changes take place.

As of yet, the JVCEA has set a leverage limit of 4 to 1. However, Taizen Okuyama, the president of the Money Partners Group and head of the association, says:

This is just a provisional measure — I don’t think a ratio of 4 is adequate.

What do you think of Japan’s plans to curb margin trading? Don’t hesitate to let us know in the comments below!

Images courtesy of Shutterstock.

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