The Japanese Financial Services Agency (FSA) — the country's financial regulator — proposed lowering the leverage rate limit of cryptocurrency margin trading from 4x to 2x.

The FSA announced the proposed measure on January. 14 in a cabinet part ordinance — an official guild that is issued along with a new law.

If enacted, the proposal would be a first for the Japanese government in regulating the rate of crypto margin trading. Co-ordinate to Nikkei, there were previously no rules set by the country.

The FSA reportedly plans to put the order into practice in Apr when a revised version of the Financial Instruments and Exchange Act enters into upshot. The FSA is accepting public comments regarding the ordinance until February. 13.

Margin trading allows traders to use borrowed funds in order to increment their potential profits, only it is also a high-risk, as information technology introduces the possibility of losses that exceed a trader'southward initial investment.

According to Nikkei, the FSA aims to protect investors from "an excessive amount of speculation and the take a chance of loss due to volatility".

Some say introducing clear regulations on margin trading is urgent since 80% of crypto trades come up from derivatives. Data from the Japan Virtual Currency Exchange Association (JVCEA) — the official self-regulatory organization for the crypto industry in Nippon — shows that the volume of leveraged, margin and futures trading for crypto was far college than that of spot trading in Japan from April 2017 to March 2018.

JVCEA enacted a leverage cap of 4x last year, leading some cryptocurrency exchanges in the country like Coincheck to reduce their rates. However, some economic experts accept suggested that the charge per unit should exist further lowered to 2x in society to match those in other jurisdictions such equally the Eu.