Cryptocurrency margin trading in Japan has been clamped down to new maximums after a review of its current laws governing payment services and financial instruments.

With the new laws, those interested in trading a financial asset using funds from a broker will be allowed to participate in cryptocurrency margin trading at “two to four times the initial deposit.”

The new laws are expected to come into effect after one year from now. Virtual currency operators will need to register with the country’s financial watchdog, Financial Services Agency (FSA), which will see the agency regulate the exchanges while pinning down on illegal cryptocurrency platforms.

In a bid to protect investors, the Japanese financial watchdog will treat cryptocurrency traders with the same regulatory power administered on traders interested in securities.

Also, to ensure the effectiveness of the new regulations, the financial watchdog will put those dealing with cryptocurrency margin trading on a different group from those supporting initial coin offerings.

With such an arrangement, the FSA is keen on keeping the bad guys out of the market consequently protecting investors against pyramid schemes among other scams.

Earlier this year, the Japanese financial regulator had expressed that they are seeking to patch undefined sections on its laws which allow even unregistered firms to request funding using virtual currencies.

In the past, the FSA had indicated that they are not fighting the cryptocurrency growth in the country. Instead, they are supporting it by enacting appropriate regulations which will enable the country’s cryptocurrency market to prosper within a regulatory framework.

Additionally, the Financial Services Agency has in the past considered abandoning the Payment Services Act in regulating virtual currency exchanges and instead use the Financial Instruments and Exchange Act.

Do you think the new rules governing cryptocurrency margin trading will help in protecting crypto traders against scams?

Let us know your thoughts in the comments section below.

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