Japan’s Crypto Exchanges Push for Margin Trading
Japan’s cryptocurrency exchanges are pleading with regulators to ease margin trading limits on popular cryptocurrencies like bitcoin (BTC).
According to Bloomberg, the country’s exchanges historically offered leverage of up to 25 times initial capital, and trading volumes might exceed $500 billion yearly between 2020 and 2021.
However, in early 2022, Japanese officials restricted crypto exchanges to provide leverage of only twice the principle capital, resulting in a significant decline in trading volumes last year.
The Japan Virtual and Crypto Assets Exchange Association (JVCEA), a self-regulatory organisation of local exchanges, is now alleging that these restrictions stifle market growth and deter new entrants.
Among the demands made by the body is for increased leverage limits of at least 10 times the principal.
The campaign for revised margin trading caps seeks to attract a diverse range of traders, including institutional investors, while also improving market liquidity. Allowing for greater leverage would also allow traders to manage their positions more effectively, according to JVCEA.
(With inputs from Shikha Singh)
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