The Japan Virtual Currency Exchange Association (JVCEA), a self-regulatory body, intends to set a certain trading cap aimed to protect retail participants on the cryptocurrency market, a local media outlet reported on July 28, quoting sources close to the matter.
According to the report, the cryptocurrency industry group intends to introduce new measures requiring from all its member crypto exchanges to set specific ceilings on maximum volumes traded by operators’ customers, thus limiting their trading activity.
The new rule will be applied to investors with small asset amounts, as it is expected that such a move should safeguard them from severe losses. Besides, it might help to reduce their daily expenses, the sources explained. However, JVCEA didn’t specify what exactly should be meant by “small assets”. Another unclear aspect of the proposal is the exact amount of potential limitations.
JVCEA is going to offer its member crypto exchanges two possible options for establishing the trading caps. One of the options is designed as a one-size-fits-all approach, with one universal fixed maximum trading amount for the category of traders with “small assets”. Meanwhile, the other implies a more personalized approach, with different ceilings that will be defined specifically for different customers in accordance with their assets value, trading experience, income, and even their age.
Notably, the industry association also intends to focus on the age group of minors in order to set some limitations on their trading activity. To achieve this, JVCEA wants to require confirmation and permission from their parents or other guardians.
Finally, JVCEA aims to back off from placing large-lot orders considering it as a helpful measure to prevent money laundering.
The final decision will be made by the industry group shortly, the sources added. Then it will be submitted to the country’s Financial Services Agency for approval.
Recently JVCEA has been coming up with a number of initiatives aiming to tighten cryptocurrency trading rules to address risk issues on the digital asset market.
Specifically, last week it also proposed to set restrictions on the permitted volume of loans for margin trading. Currently, Japan’s exchanges allow traders to use leverage up to 25 times the amount of their investment, while JVCEA would like to see the margin cap at four to one. This measure was also designed to protect margin traders from heavy losses caused by sharp price volatility which is typical of crypto markets.
JVCEA was founded in March 2018 by 16 crypto exchanges in order to develop and implement coordinated policies and standards aimed to create and support the healthy, trustworthy and secure market for cryptocurrency trading. The move followed the notorious hack of Coincheck, a Japan-based crypto exchange, in January 2018.
This article appeared first on Cryptovest
