New Cryptocurrency Trading Margins Introduced in Japan

Are you aware of the new cryptocurrency trading margin regulation in Japan? Japan is one of the countries that are confident about the potential of blockchain technology and cryptocurrencies if regulated. Over the last one year, the government through the national financial regulator has been introducing regulations meant to enhance growth of the cryptocurrency industry.

Cryptocurrency Trading Margin Regulation

Yesterday, March 18th, the Japanese financial regulator introduced a set of new regulations that are meant to take control of cryptocurrency margin trading. The executive branch of the government, The Cabinet of Japan, approved the amendments to the current financial regulations to improve the manner in which investors trade their digital assets.

The payment service laws were also revised limiting the leverage in digital currencies margin trading at 2 to 4 times the investor’s initial deposit. What is margin trading? Margin trading is defined as the use of borrowed funds from your selected broker to facilitate trading a financial asset.

cryptocurrency margin trading regulation


The report also indicates that the new cryptocurrency trading margin will be effective starting April 2020. All cryptocurrency exchange platforms licensed to operate in Japan will be required to register within one year and 6 months before the date that the laws come into effect.

The gap will give Financial Services Agency (FSA), the national financial regulator ample time to introduce the required measures especially those that target the cryptocurrency operators who are yet to register. Following the approval of the new regulations, companies doing business using cryptocurrencies will be extensively monitored just like the securities traders to safeguard the interests of the investors.

It is also important to note that the new regulations require cryptocurrency operators to be categorized in groups. The groups will make it possible for FSA to pinpoint the companies that are involved in margin trading as well as those who issue ICOs (initial coin offerings).

One of the main objectives of the cryptocurrency trading margin regulation is to protect investors from losing their hard-earned money through Ponzi schemes. The regulations will also encourage the companies to register and become fully accredited in order to do business in the country freely.

In January this year, FSA said that it was considering introducing a new law that will enable it monitor all unregistered firms who are in one way or another getting investment from clients in form of cryptocurrencies. This new law will seal loopholes in the current financial regulatory framework that allows such firms to get investments in form of digital currencies instead of fiat/conventional currencies.

Final Thoughts

The new cryptocurrency trading margin regulation introduced by FSA and passed by Japan’s national government is a clear indication that the country is committed to making the industry more secure and ideal for new and experienced investors. Read more cryptocurrency news here.