Japan Considers Increasing Leverage Limits for Retail Crypto Traders

Japan Bitcoin

Current Regulations Limit Borrowing to Twice the Risk for Crypto Traders, Prompting Asia Regulators to Explore Crypto-Friendly Policies


The Japan Virtual & Crypto Assets Exchange Association (JVCEA) has revealed that industry participants are advocating for an increase in leverage options for retail players, aiming for a range of four to 10 times leverage. Presently, customers are restricted to borrowing only twice the amount they are risking. This proposed change reflects efforts to provide retail crypto traders with more flexible leverage opportunities.

Asia regulators have been actively pursuing the implementation of crypto-friendly policies to foster growth in the sector. Japan’s government, in particular, is making preparations to relax margin trading restrictions.

Also Read: Binance’s Japan-Focused Crypto Platform to Launch This Summer

The proposed change aims to enhance the attractiveness of Japan as a favorable destination for crypto and blockchain enterprises. Genki Oda, Vice Chairman of the Association, highlights that reforming the leverage rule could contribute to this goal.

In order to stimulate market activity, Genki Oda emphasized that the proposed leverage changes would be instrumental. The Japanese cryptocurrency markets are currently engaged in discussions regarding the suggested leverage criteria, with plans to present their proposal to the Financial Services Agency (FSA), the country’s primary financial regulator.

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To support the government’s objective of fostering blockchain-related industries, an FSA official stated that cryptocurrency firms need to present compelling arguments for reducing margin trading restrictions. The FSA remains open to engaging in discussions with companies involved in digital assets regarding this matter.

Amid Hong Kong’s push to solidify its standing as Asia’s crypto hub, Japan is contemplating the relaxation of certain crypto regulations pertaining to token listing and taxes.

Notably, Japanese cryptocurrency exchanges witnessed substantial margin trading volumes amounting to approximately $500 billion in 2020 and 2021, thanks to leverage of up to 25x.

In 2022, cryptocurrency trading volumes experienced a significant decline of 75% due to the implementation of a two times leverage limit imposed by the Financial Services Agency (FSA) in Japan. This regulatory measure aimed to protect investors from substantial losses and mitigate excessive speculation in the market.

Also Read: Japan Tightens Crypto Exchange Regulations Amid Growing Concerns

Important: This article is intended solely for informational purposes. It should not be considered or relied upon as legal, tax, investment, financial, or any other form of advice.

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