The Japanese cabinet, the executive body of the country’s government approved draft amendments related to financial instruments and payment services laws, which include two notable changes related to cryptocurrencies.
Back in January, the country’s financial services agency announced that it wants to attract unregistered investment firms that are requesting funds in cryptocurrencies, rather than cash, in accordance with the Law on Financial Instruments and the Exchange of the Country.
The changes are as follow:
Firstly, there will be a restriction on cryptocurrency trading in accordance with Forex trading. Margin trading means the use of borrowed funds of a broker or exchange for asset trading.
Secondly, all cryptocurrency exchanges in the country that offer margin trading will be required to register with the government within 18 months from the effective date of the rules ( which will be some time in April 2020) and the inappropriate platforms will face closure.
The new registration scheme will exist beyond the existing license requirements, in accordance with which cryptocurrency exchanges are required to obtain a license in accordance with the Law on Payment Services, which entered into force in April 2017. Speculation outpaced the use of cryptocurrency as a method of payment. Referring to the data of the self-regulating group, the Japan Virtual Currency Exchange Association, reports say that crypto-margin trading in Japan grew to about 8.42 trillion yen ($ 75.6 billion) in December 2018 – an indicator about 11 times higher than crypto/monetary changes( 777.4 billion yen or $ 6.9 billion).
The registration scheme will also split cryptocurrency exchanges that provide margin trading to those who issue tokens through initial coin offers (ICOs) to protect investors from Ponzi schemes.