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Japanese Crypto Exchanges Taking Risky Step to Help Crypto Space Grow: Bloomberg

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Tue, 20/06/2023 - 11:15
Japanese Crypto Exchanges Taking Risky Step to Help Crypto Space Grow: Bloomberg
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Bloomberg has reported that crypto trading venues in Japan are making an effort to submit a request to the local regulator — Financial Services Agency (FSA) — to soften restrictions on margin trading and raise leverage up to as much as 10x.

However, the regulator is not that easy to persuade.

Attempt to raise leverage limits

According to the article, a lot of traders want the FSA to raise the margin trading limit from the current level and let them trade cryptocurrencies with 4x to 10x leverage.

The current level of exposure to leverage trading is 2x at maximum, per data provided by Japan Virtual & Crypto Assets Exchange Association.

The aforementioned association believes that changing the rule on leverage trading would turn Japan into a global crypto hub and attract many DLT and crypto companies into the country.

Currently, local crypto trading platforms are negotiating for a consensus as to the new leverage limit. Next month, they are expected to submit their proposal to the FSA regulator.

As of late, Japan has eased up on some rules regarding cryptocurrencies in the country, including token listing and crypto tax payments. Still, in general, local crypto-related rules are much stricter compared to user countries. Following the law on investor protection, the Japanese branch of the FTX exchange crashed in early November last year, while the bankruptcy process of the main company in the U.S. continues.

Related

FSA's response to potential leverage rises

An official of the aforementioned crypto regulator stated that crypto companies have to present substantial grounds for how easing the margin trading limits will help the country's crypto space to grow. FSA is happy to discuss this issue on crypto trading, per the official.

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