Reports have it that Bitcoin and crypto exchanges in Japan are going to encounter remarkable limitations on margin trading some weeks from now.

According to the Japan Times, there are plans to restrict margin leverage to two times the aggregate of the deposits of traders. The news outlet cited the country’s Financial Services Agency (FSA) as the source. FSA sources said the move was a measure against volatile times in crypto markets.

This comes following the domestic exchange industry imposing a limit of four times traders’ deposits on itself through a self-regulatory body in 2019.

The Japan Times reported that the new rule will be part of a Cabinet Office order associated with the revised Financial Instruments and Exchange Act that will be effective this spring. However, it is still not clear whether the restrictions will become effective immediately after the Act is introduced.

It is possible to have remarkably larger market moves through margin trading because of the potential size of the wins or losses, especially when numerous investors are involved at once.

A report says the influence of the tool is now controversial for those who think it is due to manipulation of crypto price performance.

According to data released three months ago, open interest in margin trading attained an all-time high in Japan.

Exchanges seem to be predicting changes, but its announcement by Coincheck would halt leveraged trading generally from March.

Japan has been promoting permissive regulations and closely looking after exchanges. This is to make the country a friendly jurisdiction for crypto. Meanwhile, authorities say consumers are not demanding a central bank digital currency (CBDC).

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