Japan Weighs Easing Crypto Leverage Limits for Market Liquidity

Japan is considering easing its cryptocurrency leverage trading rules to improve market liquidity and price discovery. According to lawmaker Seiji Kihara, who heads the Liberal Democratic Party's Next Generation AI and On-Chain Finance Project Team, the current two-times leverage cap is too strict.

Kihara argued that a healthy market requires enough liquidity and an effective price discovery mechanism, which the existing restriction limits. He said relaxing the restriction would help support these functions and encourage more capital to return to Japan's domestic crypto market.

The proposal follows recent legislative changes that reclassified cryptocurrencies as financial products under updated financial laws. The legislation introduces insider trading rules for crypto transactions, requires annual disclosures from issuers of certain crypto assets, and increases penalties for businesses operating without registration.