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Japan’s Regulator Plans to Limit Margin Trading for Crypto Exchanges and Others

Japan’s Regulator Plans to Limit Margin Trading for Crypto Exchanges and Others

Japan’s financial regulator, the Financial Services Agency (FSA), has announced its intention to reduce the margin leverage of exchanges to twice the traders’ total deposit. According to recent reports, crypto exchanges in Japan are likely going to face some margin of restrictions on margin trading starting this year.

At the time, FSA said it intends to watch over market volatility and correct the frequent issues of unstable cryptocurrency markets. However, it is not clear when the restrictions would come into effect as there is no confirmation whether the new restrictions will apply immediately after the authorities pass the law, the local news agency reported.

The impact of margin trading method has become a concern among some traders and industry regulators. Some industry experts claimed that the cause of such market behaviour is the manipulation of the price performance of cryptocurrencies. In October last year, data revealed that there was an all-time high of open interest in margin trading in Japan. In part, it appears exchanges are forecasting the changes.

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As one of the Asian countries looking to provide a friendly environment for cryptocurrencies growth, Japan is always monitoring crypto exchanges and fostering permissive regulations to keep the market in check. Though, the country is not ready to establish a central bank digital currency yet. It is said that there is a relatively low demand for the digital currency in the country. But it is something that could be considered if the economic indices surrounding the introduction of the digital currency are favourable to both the investors and the economy.

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