Japan’s financial regulator is said to update its regulatory framework for the cryptocurrency sector so as to control speculative investments.
Back in April 2017, the Financial Service Agency (FSA) enacted new regulation that relied on the Payment Services Act to class cryptos as legal tender. The regulatory decision came at a time when the country required domestic crypto exchange operators to register and get licensing from the authority before they could run any crypto exchanges in the country.
The FSA is now shifting to “prevent a situation in which there is no law governing (cryptocurrencies) when they come into wide use,” noted a senior official from the regulatory authority.
Yet, the regulator did not expect adopters buying cryptocurrencies such as Bitcoin to use them as investments instead of payment instruments. It is as a result of this that the FSA is presently looking at altering those regulations to check speculative investments, according to the report released on Wednesday.
The FSA created a panel of experts in April to ‘close the gaps between regulation and actual practice for cryptocurrencies’, according to the report.
For the time being, cryptocurrency exchanges are suggesting self-regulatory standards of their own. The Japan Virtual Currency Exchange Association (JVCEA) is suggesting a 4-to-1 limit on margin trading that would limit investors borrowing to only four times their original deposits.
The move, considered as a way to restrict the risk of losses for investors, is suggested in a market that currently has no restriction on borrowed margin trading. A couple of domestic exchanges offer a leverage limit of 25-to-1, the upper default margin limit for foreign exchange trading.