The Japan Virtual Currency Exchange Association (JVCEA) wants the country's Financial Services Agency (FSA) to raise the maximum leverage from 1:2 to at least 1:10, Bloomberg has reported.
The association's vice president, Genki Oda, has stated the implementation of the initiative will make Japan "more attractive for cryptocurrency and blockchain companies, and will also stimulate the expansion of trading."
The promoted revision of restrictions is explained by the desire to expand the investor base and increase asset liquidity. According to the JVCEA, the current restrictions hinder the development of the market and are a barrier to the entry of new participants.
In 2020-2021, when leverage could reach 1:25, the annual turnover of local platforms exceeded $500 billion. However, after the decision to limit this parameter to 1:2, the volume of transactions plummeted by 75%.
According to the regulator, the decision was taken in order to protect investors from increased losses amid the collapse of cryptocurrency exchange FTX.