Japan Mulls Higher Crypto Leverage Limits Amid Market Reforms

Japan is considering increasing its crypto leverage limits from two times to an unspecified amount, according to Seiji Kihara, head of the Liberal Democratic Party's Next Generation AI and On-Chain Finance Project Team.

Kihara argued during a recent financial conference in Tokyo that Japan's current 2x cap on crypto trading is 'too strict' and limiting market activity. He said a healthy market requires sufficient liquidity and efficient price discovery, which can be achieved by relaxing the leverage restriction.

The proposal to adjust existing regulations governing cryptocurrency trading aims to encourage more capital to return to Japan's domestic crypto market. The discussion over leverage follows major legislative changes approved earlier this month that reclassify cryptocurrencies as financial products instead of treating them primarily as payment instruments under the Payment Services Act.