Japan introduces new regulations: Limiting the leverage ratio of cryptocurrency margin trading

According to a report by Japanese news agency Nikkei on March 18, Japan’s financial regulator, the Financial Services Agency (FSA), has introduced new regulations for cryptocurrency margin trading.

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It is reported that the Cabinet of Japan has approved a draft amendment to Japan’s Financial Instruments and Payment Services Law, which will limit the leverage ratio of cryptocurrency margin trading to 2 to 4 times the initial deposit.

By definition, margin trading is the use of funds borrowed from brokers to trade financial assets, thereby forming a kind of collateral for loans.

It is reported that the new regulations will come into effect in April 2020, requiring cryptocurrency exchange operators to register within 18 months from that date, which will allegedly enable the FSA to take relevant measures against unregistered cryptocurrency "quasi operators". Under the new rules, entities that trade cryptocurrencies will ostensibly be subject to similar monitoring as securities dealers in order to protect investors. In addition, cryptocurrency operators will be divided into two categories, namely those engaged in margin trading and those issuing tokens through ICOs.

According to reports, the regulator’s move is aimed at ensuring that investors are protected from Ponzi schemes while encouraging legitimate companies to issue tokens as a financing tool.

In January this year, the FSA revealed that it was considering regulating unregistered companies that apply for cryptocurrency investments. The move is reportedly an attempt to fill a loophole in Japan's existing regulatory framework. Under the current regulatory framework, unregistered companies that raise funds in cryptocurrencies rather than fiat currencies remain in a legal gray area.

In August 2018, the FSA Director stated that the agency wanted the cryptocurrency industry to "grow under appropriate supervision" in order to find a "balance" between consumer protection and technological innovation. He pointed out:

“We have no intention of overly suppressing (the crypto industry). We want to see it grow with proper regulation. ”

Original text: https://cointelegraph.com/news/japan-introduces-new-regulations-for-cryptocurrency-margin-trading

Author: Ana Alexandre

Translator: Xiyu

Source (translation): Babbitt Information (www.8btc.com/japan-introduces-new-regulations-for-cryptocurrency-margin-trading)