The Japanese Virtual Currency Exchange Association (JVCEA) intends to press the Financial Services Agency to raise the maximum leverage from 1:2 to at least 1:10. Bloomberg reports.
In an interview with the agency, JVCEA vice-chair Genki Oda said that implementing the initiative would make Japan “more attractive to crypto- and blockchain companies, and would spur expansion of trading”.
The push to revise the restrictions is explained by a desire to broaden the investor base and boost asset liquidity. The current limits hamper market development and deter new entrants, the JVCEA said.
In 2020-2021, when leverage could reach 1:25, annual trading turnover on local platforms exceeded $500 billion. After the decision to cap this at 1:2, the volume of operations collapsed by 75%. The regulator at the time explained the move as an effort to protect investors from heightened losses in the wake of FTX collapse.
Oda expects that in July the FSA reached out to global regulators with a proposal to treat the cryptocurrency industry as strictly as banks.
From June 1, in Japan came into force the so-called Travel Rule from FATF, requiring monitoring of VASP transactions of digital assets for AML purposes.
Earlier, authorities amended six foreign-exchange laws as part of anti-money laundering measures.