Crypto Exchanges to Experience Margin Trading Restrictions in Japan
According to reports, Bitcoin and Crypto exchanges in Japan will soon experience limitations on margin trading. The Japan Times pointed out that there are plans to restrict margin leverage to two times the aggregate of the trader’s deposits. The news outlet cited the country’s Financial Services Agency (FSA) as the source.
FSA sources noted that the move was a measure against volatile times in the crypto market. It comes after the domestic exchange industry imposed a limit of four times traders’ deposits on itself through a self-regulatory body in 2019.
The Japan Times reported that the new rule will be part of a cabinet office order associated with the revised Financial Instruments and Exchange Act that will take effect this spring. However, it is still unclear whether the restriction will be effective immediately after the Act gets introduced.
What to Expect after Margin Restrictions
There may be remarkably broader market moves after margin trading restrictions because of the potential size of the wins and losses, especially when numerous investors get involved at once. A specific report says that the tool’s influence is now controversial for those who think it is due to manipulating crypto price performance.
According to data released three months ago, open interest in margin trading attained an all-time high in Japan. In other news, exchanges seem to be predicting changes, but its announcement by Coincheck would halt leveraged trading generally from March.
Japan is promoting permissive regulations and closely looking after exchanges. It is to make the country a friendly jurisdiction for crypto. At the moment, authorities say crypto consumers are not demanding a Central Bank Digital Currency (CBDC).