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- 1 Japan was doing great in terms of trading volume, when the leverage was at 25X it accumulated $500B.
- 2 JVCEA seeks that the margin trade leverage go up to 10X from current 2x level.
The crypto exchanges in Japan are seeking the uplifting ceiling of leverage on margin trade. Margin trading was one of the well-performing sectors. But now its struggling in the region given lower leverage offering. Crypto exchange association in Japan reported to come forward and asked regulators to ease off the leverage limits.
Crypto Exchanges Group Demands in Japan
In an interview with Bloomberg on Tuesday, June 19, Vice Chairman of Japan Virtual and Crypto Assets Exchange Association (JVCEA), Genki Oda, stated that Japan could become a more attractive and preferable choice for crypto and blockchain companies if leverage rule reforms take place. Cryptocurrency trading will also grow in the region.
The self-regulated local exchanges group in Japan, JVCEA, puts the arguments forward related to the restrictions in the burgeoning market, creates blockade in the growth and stops new participants from entering the space. Along with easing the regulations, the crypto-proponent group urges to increase the leverage limits.
JVCEA seeks the leverage limited to heighten as much as ten times the principal amount.
As per Bloomberg, Japan used to once offer leverage up to 25 times the principal amount . At the time, trading volumes also reached a significant level of $500 billion respectively, for two years consistently—2020 and 2021. However, Japanese regulators pulled down the bar and limited the offering leverage to only double of the principal capital in 2022. With the minimum leverage, trading volumes started declining and witnessed a huge drop during the year.
Margin Trade Leverage Lifting will Attract Trading Volume
JVCEA argued that the revision in margin trading limitation would result in attracting traders from diverse backgrounds. The efforts would also include bringing more institutional investors and eventually more liquidity into the market. Traders will be able to manage more effective positions following the higher leverage.
Financial regulators in Japan are expected to assess the crypto exchanges’ request while keeping the risks involved in the market and the investor’s protection in consideration. If it takes place, the crypto industry participants would be asked for reviews and consultations on the revision in margin trading limit.
The Financial Services Agency (FSA) is in charge of crypto regulations in Japan. Japan Virtual Currency Exchange Association (JVCEA) and Japan Security Token Offering Association (JSTOA) are two self-regulated bodies which assist the FSA in regulatory procedures.
Prime Minister of Japan, Fumio Kishida, stated in October last year about the plans of the Japanese government to digitize national identity cards. In addition, there were NFTs issued to the local authorities following the digital solutions. The government was also seen to work towards Web3 services.
Nancy J. Allen is a crypto enthusiast, with a major in macroeconomics and minor in business statistics. She believes that cryptocurrencies inspire people to be their own banks, and step aside from traditional monetary exchange systems. She is also intrigued by blockchain technology and its functioning. She frequently researches, and posts content on the top altcoins, their theoretical working principles and technical price predictions.
