2020 seems to be bringing on tougher regulations for cryptocurrency in Japan. According to a report, the country is enforcing stricter restrictions on margin trading for bitcoin and cryptocurrency exchanges starting the onset of spring.
The Financial Services Agency (FSA) of Japan plans on introducing regulations to limit the cryptocurrency margin leverage trading to twice the number of deposits of its traders. The regulation aims to limit the risk of losses due to market price fluctuations.
The new rule would be part of the Cabinet Office order in connection with the revised Financial Instruments and Exchange Act. According to sources, the act is supposed to go into action this spring. With the new regulations in effect, the association is keen on reviewing its past rules. Businesses and exchange operators are under heavy pressure to review and change their business models to accommodate the stricter restrictions.
Cryptocurrency and bitcoin have gained massive following and acceptance due to their hassle-free payment methods and low fees. But is it all that there is to it? Statistics report that about 80 to 90 percent of the cryptocurrency transactions are speculative margin trading. In October, it was reported that margin trading was at its peak in the country. With all its considerations, the FSA has agreed on a leverage cap of twice its past price and market fluctuations.
Japan and Digital Currency
The past year for cryptocurrency and blockchain has been quite the welcoming year. Japan too has been on the progressive front in adapting to the rising need. A key event that marked cryptocurrency adoption in the country is the release of a digital currency by the Japanese social media giant, Line. The company launched its own crypto trading system, Bitmax, on 17 September; cementing cryptocurrency’s rising dominance in the country.