Japan’s FSA to introduce new rule to limit leverage in crypto margin trading: Report
Tue, 14 Jan 2020, 04:12 am UTC
Japan’s Financial Services Agency (FSA) is planning to limit the leverage in cryptocurrency margin trading to two-times the deposit of traders, The Japan Times reported.
Sources familiar with the ongoing development told the news portal that the new rule is set to be included in a Cabinet Office order linked to the revised Financial Instruments and Exchange Act which will come into effect in spring.
The leverage cap of two times was decided by the FSA on the basis of past price fluctuations and cryptocurrency regulations in Europe and the United States, the sources said. Japan’s crypto industry already follows a self-imposed cap of four times.
The agency is seeking to introduce this new rule in order to mitigate the risk of losses, which could blow up due to price volatility. It intends to review its rules to reflect this new cap and exchange operators are expected to alter their business models accordingly.
As per the report, the FSA decided on the new rule following discussion with an industry body, the Japan Virtual Currency Exchange Association.