Revitalizing the virtual currency industry
It turned out that the Japanese crypto asset (virtual currency) industry plans to request the Financial Services Agency and government officials to raise the upper limit of leveraged trading as early as the end of July. 20, Bloomberg reported.
Previously, it was possible to trade up to 25 times the margin, but the current limit has been lowered to 2 times, resulting in a sharp drop in trading volume. One aim is to revitalize the market by raising the maximum multiplier.
Bloomberg interviewed Mr. Oda, Vice Chairman of the Japan Crypto Asset Exchange Association (JVCEA), and reported the contents of this time. It is reported that Mr. Oda, jointly with JVCEA and the Japan Crypto Asset Business Association (JCBA), responded that he would request the Financial Services Agency to raise the maximum ratio.
The desired upper limit magnification may be 4 to 10 times. Since there are many transactions of about 6 to 8 times in foreign exchange transactions, there are many requests from member virtual currency exchanges for 4 to 10 times.
By raising the upper limit, it hopes to attract capital inflows from institutional investors and the entry of foreign companies into Japan.
What is leveraged trading
One of the trading methods that are also used for assets other than virtual currency. A major feature is the ability to trade more than own funds.
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Leveraged trading allows you to trade more than your own funds, so while you can aim for more profits, losses can also be large. In consideration of these characteristics, Japan amended the law in May 2020 to limit the amount of margin deposits to twice the margin for individual investors to engage in leveraged trading of cryptocurrencies.
Regarding the reason for the reduction to 2 times, the materials of the Financial Services Agency state as follows.
- Because there are multiple major virtual currencies with severe price fluctuations
- To ensure regulatory clarity for customers
The Japanese government is now actively promoting Web3, but it will also be necessary to address the challenges associated with raising the upper limit.
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