West Nations has begun an aggressive fight against digital currency, while officials in Asia have been implementing crypto-friendly regulations to allow more businesses to enter the industry.

Moreover, lawmakers in Japan are currently preparing to loosen restrictions on margin trading.

The Japan Virtual & Crypto Assets Exchange Association reports that market participants seek to allow retail players four to 10 times as much leverage as possible. Nevertheless, users can currently only increase their exposure through borrowing.

Genki Oda, vice chairman of the association, stated in an appearance that changing the leverage regulation may make Japan more appealing for blockchain and cryptocurrency businesses. 

Additionally, Genki Oda claimed that such a move would promote increased market trade.

Japanese national crypto exchanges are already negotiating an agreement on the suggested leverage ceiling. They will probably submit their idea to the banking Services Agency (FSA), the top banking authority.

As per the Financial Services Agency (FSA) representative, digital currency firms must offer convincing arguments for lowering margin trading limitations, which is consistent with the government’s goal of developing blockchain-related industries. The FSA is open to have conversations about this issue with companies that deal in digital assets.

This event occurs shortly after Hong Kong intensifies efforts to become the region’s hub for the cryptocurrency industry in Asia. Japan is therefore considering easing some of its crypto regulations around token listing and taxation.

The usage of up to 25 times of leverage in trading on digital currency exchanges in Japan resulted in significant volumes of margin trading that reached $500 billion in 2020 and 2021. 

Nevertheless, after the Financial Services Agency (FSA) set a limit of two times leverage, the volumes drastically reduced by 75% in 2022. 

Depending on country laws, spot margin trading on virtual asset trading platforms is not always available in other areas of the world. These platforms typically provide leverage of five to 10 times the initial amount. Certain exchanges offer larger loans, reflecting the dangerous speculation that can cause waves of panic and greed in the cryptocurrency market.

According to Oda, the volatility of cryptocurrencies has decreased over the past three years and local exchanges in Japan are well-equipped to assist investors in managing risks through margin trading.

This action was taken in an effort to prevent unnecessary speculation and safeguard investors from significant losses.

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Filed under: Bitcoin - @ June 20, 2023 10:13 am