- Now local traders can use 2x leverage
- But platforms want to increase it from 4x to 10x
Japan’s crypto exchanges are looking to ease restrictions on margin trading, Bloomberg writes. It’s about increasing leverage from 2 to 4 or 10-x. Industry representatives will submit a request to the Financial Services Agency of Japan next month.
Japan’s Crypto Asset Trading and Exchange Association representative Genki Oda said the move would help boost trading among retail traders:
“Leverage rule reform could make Japan more attractive to crypto and blockchain companies.”
Japanese cryptoplatforms have offered margin trading with leverage up to 25. This allowed them to generate trade volumes of up to $500 billion annually (data for 2020 and 2021). But then the regulator tightened the rules to reduce the risk for customers. They can at most double their leverage by borrowing. This has led to a sharp drop in margin trading.
The Japan Crypto Asset Trading and Exchange Association believes that increased leverage will not increase losses for traders. Local exchanges are introducing special tools to help customers manage the risks associated with such positions.
If the regulator agrees to the easing, the new rules will take effect around 2024, Genki Oda said.