Japan’s FSA (Financial Services Agency) has just allowed crypto industry the permission to self-regulate. However, immediately afterward, they brought up a subject of introducing a cap on cryptocurrency margin trading. The financial regulator expressed that this move would be done for the benefit of traders, as it would reduce their exposure to volatility risks and keep speculative trading in check.
A new report published by Nikkei today states that margin traders’ borrowing power will likely be limited to only two to four times of their deposit. This is significantly less than the current borrowing power, which can be up to 25 times larger than the deposit. This is troubling since a 4% drop in bought crypto assets might completely wipe out the deposits.