Cabinet of Japan Approves New Financial Regulations for Cryptocurrency Margin Trading

Financial regulators in Japan have released new regulations for the cryptocurrency industry’s margin trading practices. A draft amendment was approved by the Cabinet of Japan. According to the amendment, the leverage limit in cryptocurrency margin trading is two to four times the initial deposit.

Under the new regulations, which will be effective April 2020, cryptocurrency exchange operates must register within 18 months of the effective date. The Financial Services Agency will also introduce certain measures concerning unregistered cryptocurrencies.

To protect investors, cryptocurrencies will be monitored. To make the monitoring process easier, there will be two groups of cryptocurrency traders – those who trade margins and those who issue tokens though ICOs. This will allegedly help prevent investors from getting involved in Ponzi schemes and it will also promote legitimate trading practices by companies.

Further, the FSA reported that it may regulate unregistered firms soliciting investments from cryptocurrencies. This process is to allegedly eliminate a loophole in the country’s regulatory framework allowing for unregistered firms to generate funds in crypto instead of fiat. The FSA’s commissioner also stated that it wants the industry to develop under appropriate regulations. The commissioner also stated,

“We have no intention to curb [the industry] excessively. We would like to see it grow under appropriate regulation.”

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