Japanese Crypto Exchanges Push for Limit on Margin Trading Borrowing

A self-regulatory organization formed by crypto exchanges in Japan is proposing a limit on how much investors can borrow when margin trading

AccessTimeIconJul 25, 2018 at 6:00 a.m. UTC
Updated Sep 13, 2021 at 8:12 a.m. UTC
10 Years of Decentralizing the Future
May 29-31, 2024 - Austin, TexasThe biggest and most established global event for everything crypto, blockchain and Web3.Register Now

A self-regulatory organization formed by cryptocurrency exchanges in Japan is proposing a limit on how much investors can borrow when margin trading.

According to a report from Jiji Press on Tuesday, the Japan Virtual Currency Exchange Association (JVCEA) has suggested domestic trading platforms enforce a restriction that investors can only borrow up to four times their deposit.

The JVCEA said the proposed plan aims to protect domestic investors because there are currently no market rules governing the upper limit of how much cryptocurrency investors can borrow in margin trading.

According to statistics released by Japan's market watchdog the Financial Services Agency (FSA) in April, there were around 142,000 crypto traders focused on derivatives in 2017, comprising a small fraction of the total 3 million traders in Japan.

However, over 80 percent of the entire cryptocurrency trading volume in the country in 2017 came from derivatives trading, which recorded $543 billion last year. And more than 90 percent of that was from margin traders.

Formed by Japanese crypto exchanges in a response to a heist on the Coincheck platform early this year, the JVCEA seeks to impose self-regulatory rules in a bid to create a healthy cryptocurrency trading market. It is now planning to submit the proposal to the FSA to get the regulator's endorsement for a potential wider implementation.

That said, the association indicated the new rule could lead to crypto investors' departure from exchanges. As such, it aims to add measures gradually and would allow exchanges to independently set their own limits.

Japanese yen image via Shutterstock


Please note that our privacy policy, terms of use, cookies, and do not sell my personal information has been updated.

CoinDesk is an award-winning media outlet that covers the cryptocurrency industry. Its journalists abide by a strict set of editorial policies. In November 2023, CoinDesk was acquired by the Bullish group, owner of Bullish, a regulated, digital assets exchange. The Bullish group is majority-owned by Block.one; both companies have interests in a variety of blockchain and digital asset businesses and significant holdings of digital assets, including bitcoin. CoinDesk operates as an independent subsidiary with an editorial committee to protect journalistic independence. CoinDesk employees, including journalists, may receive options in the Bullish group as part of their compensation.

Learn more about Consensus 2024, CoinDesk's longest-running and most influential event that brings together all sides of crypto, blockchain and Web3. Head to consensus.coindesk.com to register and buy your pass now.