Japan’s Crypto Watchdog Stomps on 100x Bitcoin Margin Trading, Malaysia Bans ICOs
Financial regulators around the world are issuing restrictions on the Wild West of Cryptocurrency in a bid to curtail runaway speculation on digital assets and new digital investments.
In Japan, the Financial Services Agency (FSA) plans to introduce a rule that will limit the leverage in cryptocurrency margin trading. Instead of permitting 10x to 100x leverage, the proposal limits margin trading to just twice the deposits of traders, reports the Japan Times.
A number of exchanges offer margin trading including BitMEX and OKEx, which offer up to 100x leverage on some of their products. Leading exchanges Binance, Kraken and Bitfinex also offer margin trading.
The legislation aims to reduce the risks of big losses due to Bitcoin’s wild swings and volatile price fluctuations spread across the entire cryptocurrency market where an estimated 80 to 90% of the transactions via cryptocurrency exchanges are speculative margin trading. The FSA’s 2x leverage cap, which sources say could go into effect as early as spring, could jolt the industry, forcing crypto exchanges to rethink heavy reliance on margin trading that drives revenue and sparks interest among crypto traders.
In Malaysia, the country’s Securities Commission released new guidelines today for crypto initial exchange offerings (IEOs), while outright banning initial coin offerings (ICOs) from individual token issuers.
Throughout the first phase of the implementation,crypto exchanges offering IEOs are now responsible for conducting due diligence on the products they offer, working alongside the SC to assess digital tokens and their issuers.
The goal is purge the industry of scammers who are peddling fraudulent offerings or investments that appear to be too good to be true. As in Japan, Malaysian regulators are also trying to restrict the freewheeling nature of cryptocurrency investments with a set of enforceable rules that are intended to protect participants.
Retail and angel investors are subject to different limits. Retail investors can invest up to RM 2,000 per issuer, roughly $490 USD, and not exceeding RM 20,000 within a 12-month period.
The threshold for angel investors within a 12-month period is a maximum of RM 500,000, worth roughly $123,000. There is no restriction on investment amounts for sophisticated investors.
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