The Japan Currency Exchange Association ‘JCEA’ has recently in collaboration with different active exchanges active in the country to allocate itself as an independent regulatory body dedicated to sanitize the cryptocurrencies among investors.
The Organisation has proposed its first two trading rules for the crypto industry starting from marginal crypto trading to well balanced approach for crypto traders.
CryptoCurrency Margin Trading
As from a local media news, The Japan Currency Exchange Association is planing to setup a two step process leverage limit on cryptocurrency margin trading. The cap on the extent to which cryptocurrency traders can take advantage of borrowed funds to substantially magnify their gains aims to prevent quick losses.
As it currently stands, some exchanges permit leverages of as much as 25 times the deposited amount. According to the report, at this point, a slight drop in the price of the traded asset with as little as 4% could wipe out the entire deposit.
Well Balanced Approach
As we know, leverage trading is a major party influencing the crypto industry. However, beginners are oftentimes at risk as it’s challenging to use the option precisely and accurately. Having to weigh in both positions, JVCEA will consider exceptions in certain situations. The organisation is purportedly considering to allow higher leverage ratios if the exchange service meets certain conditions like automatic stop-loss mechanisms.