Japan’s digital currency exchange promotes margin trading, capping borrowing

A self-regulatory body set up by Japan’s digital currency exchange has proposed limiting the amount investors can borrow in margin trading.



According to a Tuesday Jiji press, the Japan Virtual Currency Exchange Association (JVCEA) has proposed a Restri Ction on domestic trading platforms at which investors can borrow up to four times the amount of money they deposit To encrypt currency margin trading.


Jvcea said the proposed plan is aimed at protecting domestic investors because there are no relevant market rules to limit the amount of money that investors can borrow in margin trading.

In 2017, some 142,000 cryptographic traders traded in derivatives, accounting for only a fraction of the total of 3 million traders in Japan, according to statistics released by the Financial Services Authority (FSA) of the Japanese market regulator in April.

However, derivatives accounted for more than 80 per cent of the country’s encrypted currency trading in 2017, with $5.43bn last year, more than 90 per cent of which came from margin trading.

Earlier this year, Japan’s digital currency exchange set up JVCEA in response to a theft on the Coincheck platform, with the aim of self-regulation to create a healthy digital currency trading market.

The company is now planning to submit the proposal to the FSA to obtain regulatory approvals for possible wider implementation.

Still, the association said the new rules could lead to the withdrawal of digital currency investors from exchanges. So it aims to gradually increase measures and allow exchanges to set their own limits.