Japanese authorities are now biting down on cryptocurrency. The Japanese Financial Services Agency (FSA) has said that in 2020, it will enforce a limit on crypto margin trading. The FSA wants to limit trading leverage to 2x.
According to reports, the rule will be part of an order that seeks to make changes to the Financial Instruments and Exchange Act. The new development is expected to go live sometime in Spring.
Reportedly, the 2x was reached by the FSA based on calculations from crypto’s volatility. The FSA also took into account, the regulations for digital assets as are available in other regions like the U.S. and the U.K.
The FSA’s main motive is to reduce the possibility of losses that can be incurred from margin trading. In other places and with other platforms, the leverage available is much more. For example, platforms like BitMex allow up to 100x in leverage. For Binance, the margin can be up to 125x.
In the UK, the Financial Conduct Authority (FCA) believes that trading crypto derivatives should not be allowed. A report published by The Economist states that the agency is looking to ban that part of the market because it views it as illegal gambling.
In the 12 months before October 2019, the FCA opened investigations into 87 crypto firms.