FSA – Japan’sFinancialServices Agency isthinking toplacea cap on the leverageaccessiblefor crypto margintradingto minimise speculations and the associated risks.
In line with a recent news report by ‘Nikkei,’ thefinancialmarket regulator [FSA] is considering limiting crypto margin traders’ borrowing powerto 2to 4 times their deposits.
Currently, thereare not anyrulesspecifically governing the cryptocurrency margintradingin Japan, the reportstated, with exchangesoffering a maximum of twenty fivetimes leverage.Which simply means that the traderscouldeffectively borrow cryptocurrenciesworthup totwenty fivetimes the deposit withan exchange,butsimplya 4%dropin the purchased crypto assets would wipe out the initial deposit.
Nikkeiaforementionedthat seven of thesixteenauthorisedexchanges by the FSAcurrentlyoffermargin tradingservices, adding that a panel comprised of FSAofficersandindustryspecialistsispresentlysetto discusswaysto impose potentialruleswithin thisspace.
The news follows previous statisticsdisclosedby the FSA,thatindicated cryptocurrency margintrading has seena rapid growth within Japan.As an example, over80%ofthe overallcryptocurrencytradingvolume in Japan 2017 came from derivativestrading,thatrecorded $543 Bln.Over90%of that figure came from margin traders.
Earlier this year,the JapaneseVirtual Currency Exchange Association [JVCEA], a self-regulatory bodyfoundedby thesixteenauthorisedtradingplatforms in Japan, pushed for setting a cap asa lowasfourtimes the deposit.
The chairman of the association ‘Taizen Okuyama,’ was quoted saying:
“Thisis simplyatentativemeasure–i don’tassumearatiooffouris adequate.”
Even just yesterday, the FSAformallyapproved the JVCEA as a “certified fund settlement business association,”that simply meansitcurrentlyhaslegal statusto police domestic crypto exchanges.