New crypto margin trading regulations
The executive branch of the Japanese government reportedly approved draft amendments to local laws on financial instruments and payment services that limit leverage when trading cryptocurrency margins two to four times the initial deposit.
Margin trading regulations in a brief
Margin trading is the use of borrowed funds from a broker to trade a financial asset, thus forming collateral for a loan. New rules should enter into force in April 2020. They will require cryptocurrency exchange operators to register within 18 months from this date, which is said to allow the Financial Services Agency (FSA) to take appropriate measures for the unregistered cryptocurrency. "Quasi-operators".
Following the promulgation of new rules, cryptocurrency entities will be allegedly monitored in the same way as securities traders in order to protect investors. In addition, cryptocurrency operators will be divided into groups in order to identify those involved in margin trading and those who issue tokens through initial offers of coins (ICO).
New crypto margin trading regulations reasons
It is assumed that through reform in the crypto space, the Japanese regulators are seeking to protect investors from falling into Ponzi’s schemes a fraudulent investment that involves the payment of purported returns to existing investors from funds contributed by new investors. Also, the Japanese authority expects that the new crypto margin trading regulations will encourage legitimate companies to use offers as tools for fundraising.
In January, the FSA addressed the issue of regulating unregistered firms that attract investment in cryptocurrency. According to reports, this initiative was an attempt to close a loophole in the existing regulatory framework of the country in which unregistered firms that collect funds in cryptocurrencies, rather than in paper currencies, remain in the legal gray zone.
Crypto in Japan has a lot of potential
Beau Stoner the blockchain consultant in one of his latest broadcasts has recently shared some words about his experience of using Bitcoin in Japan and crypto regulations in this country.
He mentioned very poor merchant adoption to the bitcoin and crypto overall:
“My experience completely surprised me and blew me away. However, it does not change the fact that Japan still seems a lot of growth in its exchanges, that have done very well in Japan in the past. The reason for it is that the Japanese government was Pro toward its crypto regulations.
But user and merchant adoption are zero from what I could see. Stoner explained such controversy in the Japans habit of spending money and using different payment options. He outlined that despite "being highly technological country, Japan still remains a mostly cash using country. “
Concluding his words Stoner stated, it is “important to separate the backend business to business side from the business to the consumer side because people aren’t using Bitcoin in Japan. There is a lot of work to do and lots of potential at the same time.”
Back in August 2018, the FSA Commissioner stated that the agency wanted the cryptocurrency industry to “grow under proper regulation” in order to find a “balance” between consumer protection and technological innovation, noting: “We do not intend to excessively curb cryptocurrency. We would like it to grow with proper regulation. "
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