Japan’s cabinet has approved a draft series of changes to the country’s laws governing financial instruments and payment services, in a move designed to further standardize the cryptocurrency marketplace, according to Nikkei Asian Review. The draft amendments will limit the use of leverage in crypto market trading, at “two to four times initial deposits."
As Nikkei reported, those limits are closer to the standards used for foreign exchange trading.
The plan reportedly involves new registration requirements as well:
All cryptocurrency exchanges that handle margin trading will be required to obtain new government registration. This will be separate from an existing registry that focused mainly on cash platforms created in 2017, part of a first-of-its-kind legal framework that recognizes cryptocurrency as legal tender.
Unlike earlier registrations which focused on preventing cryptocurrency money laundering, the proposed changes are designed to ensure that cryptocurrency exchanges are overseen in the same way that the government monitors securities traders, with the stated aim of protecting investors.
The new rules are not expected to be implemented until April 2020, and exchanges that offer margin trading need to register “within 18 months of that date.” Meanwhile, the country’s Financial Services Agency will continue to scrutinize so-called “quasi-operators” that are still waiting for approval for their registration.