JVCEA wants to limit the amount of loans for traders

A self-regulatory organization created by Japanese cryptocurrency exchanges is proposing to introduce a limit on the size of the loan that investors can take out when trading on margin.

According to a report from Jiji Press, The Japan Cryptocurrency Exchange Association (JVCEA) has proposed that domestic trading platforms introduce a restriction that investors' maximum loan size cannot be more than four times the size of their deposit. 

According to statistics published by the Financial Services Authority (FSA) in April, only 142,000 cryptocurrency traders focused on derivatives in 2017. This is a very small number, considering that there are more than three million active traders in Japan. 

However, as of last year, more than 80% of the country's total cryptocurrency trading volume came from derivatives trading, namely $543 billion. More than 90% of this amount comes from margin trading.

JVCEA, which was created in response to platform hack This year, Coincheck aims to establish self-regulatory rules to create a healthy environment in the cryptocurrency trading market. JVCEA is currently planning to submit a proposal to the FSA to seek regulatory approval to use its powers more widely. 

Representatives of the association indicated that the new rule could lead to cryptocurrency investors starting to leave exchangers. Therefore, at the moment, its goal is to gradually introduce measures that will allow exchangers to set their own limits.

According to coindesk.com