New Rules For Crypto Margin Trading Approved By Japanese Cabinet

News, Regulation | March 19, 2019 By:

New regulations for crypto margin trading are being introduced in Japan to bring further order to one of the world’s biggest cryptocurrency marketplaces.

Local news agency Nikkei reported on Friday that the Cabinet of Japan approved draft amendments to the country’s financial instruments and payment services laws, which would cap leverage in crypto margin trading at two to four times initial deposits.

The new rules, which are expected to come into force in April 2020, are in line with standards that are similar to those in foreign exchange trading. Under the new rules, cryptocurrency exchange operators that handle margin trading are required to obtain new government registration, which will be separate from an existing license that focused mainly on cash platforms created in 2017.

Entities dealing cryptocurrency will be divided into categories to distinguish those that engage in margin trading from those that issue tokens in initial coin offerings (ICO). Approved crypto exchange operators will reportedly be monitored similarly to securities traders in order to protect investors.

The amendments are intended to protect investors from unsavory offerings that more closely resemble Ponzi schemes, and to encourage more legitimate companies to use offerings as fundraising tools.

In January of this year, Japan’s Financial Services Agency (FSA) said that it was considering to regulate unregistered companies providing cryptocurrency investment services in a bid to close a loophole in the country’s existing regulatory framework.