Japan’s Financial Watchdog to line Low Leverage Cap for Crypto Margin Traders: Report

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Japan’s Financial Watchdog to line Low Leverage Cap for Crypto Margin Traders: Report

The Financial Services Agency will impose the new rule out a revision to the Financial Instruments and Exchange Act expected in spring, Japan Times sources said during a report on Saturday.

While the nation's industry already follows a self-imposed rule setting a maximum of four-times leverage, the watchdog aims to halve that thanks to the volatility of the crypto markets, the article says.

The 2x cap decided by analyzing historical price movements, also as cryptocurrency regulations in Europe and therefore the U.S., the sources told the days . the choice also follows talks with the the Japan Virtual Currency Exchange Association – the country's self-regulatory body.

Margin trading is trading assets using borrowed funds, with leverage being the multiple of the initial deposit which will be borrowed. Some platforms within the crypto space offer leverage of overflow 100x.

Noted economist and crypto critic Nouriel Roubini has previously hit out at exchanges offering such high levels of leverage saying they expose traders to an excessive amount of risk.