- Foreign exchange leverage limit in Japan is 1:25, but the JVCEA proposes a cap of 1:4.
- Leveraging is not common in the crypto industry, but some exchanges do offer it as a service.
The self-regulatory body in Japan, the Japan Virtual Currency Exchange Association (JVCEA) is proposing a change in the current leverage limit for cryptocurrency exchanges. Leveraging is a service offered by both foreign exchange and crypto exchanges; it allows the traders to make bigger profits. However, the service can also lead to a multiplication of losses.
Leveraging is used by many foreign exchange brokers, but many regulators around the world view this method as being illegal to some extent. Therefore the regulatory authorities have introduced caps to limit the extent of the leverage. For Japan, the cap is 1:25 while the cap for both the United States and the United Kingdom is 1:50.
Leveraging is not common in the cryptocurrency world, however, but it is available on some cryptocurrency exchanges. Quoinex has a leverage of 1:25 according to Cryptovest. Crypto trading in Japan continues to grow with each passing year. The Financial Services Agency (FSA), according to Finance Magnates reported that the citizens in the country have at least $3.5 million in digital assets. The Finance Magnates reports that:
“The JVCEA is proposing a cap of 1:4, which means that customers would be able to bet a maximum of four times the amount of money that they actually put in. The measure would take effect after a one-year grace period, and if an exchange decides to set its rate independently of the guidelines it would be obliged to report any losses beyond the amount deposited by the relevant customer.”
The JVCEA was established in April and it includes various companies with cryptocurrency-related businesses. It also brings together the Japan Blockchain Association and the Japan Cryptocurrency Business Association. It is made of sixteen crypto exchanges that have been licensed by the FSA.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.