In a bid to bring a greater degree of order to one of the world’s largest virtual currencies marketplaces, Japanese financial regulators have unveiled new regulations for margin , Nikkei, March 19, 2019.
Capping Margin Trading
According to the local media outlet, Japanese financial authorities on March 15, 2019, approved draft amendments to slightly tweak the country’s financial instruments and payments services laws.
Per the newly approved amendments, exchanges in are required to cap leverage in digital currency margin . Reportedly, this cap has been set at two to four times the initial deposits. Notably, the new margin limits are identical to those in foreign exchange .
For the uninitiated, in margin , an investor borrows funds from a broker or a financial intermediary to trade a financial asset. The asset being traded thus becomes the collateral for the loan availed from the lender.
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It’s worthy of note that the new rules pertaining to margin will officially come into effect from April 2020. exchanges in that offer margin services to users will be required to obtain new government registration within 18 months from April 2020.
It is expected that the 18 months window will give enough time to ’s financial watchdog, the Financial Services Agency (), to crack down on illegal “quasi-operators” that are in the business of even though their registration applications haven’t been approved yet.
Safeguarding Investors
While has not been entirely dismissive of like and , it is leaving no stones unturned to ensure the safety of investors who are willing to put their money into the emerging asset class.
According to the Virtual Currency Exchange Association (), the total digital currency margin in reached as high as $75.6 billion in December 2018, which is almost 11 times greater than the scale of cash transactions in the country.
With new margin rules in place, crypto exchange operators will be supervised in a manner akin to securities traders.
BTCManager on October 25, 2018, how the FSA gave the self-regulatory status to exchanges in . The move was lauded by crypto enthusiasts the world over and showed ’s confidence in the potential of the technology’s future.
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Published at Tue, 19 Mar 2019 11:11:46 +0000
