Japanese crypto exchange Coincheck has suspended new orders for margin trades, while confirming it is reducing margin on existing trades from 5X to 4X, a 20% reduction.
The margin reduction will come into effect from October 31, with new margin trading orders suspended effective immediately. The news is the latest blow for Coincheck users, as the exchange attempts to comply with the demands of domestic regulators.
Following a high-profile hack in January 2018 which saw over $534 million stolen from the exchange, Coincheck has been working closely with regulators, including on improvements to internal systems and management.
The halt to new margin orders reflects a move away from leveraged crypto, which could eventually be replicated across Japanese exchanges more broadly.
According to a statement from the firm, the move is “based on the self-regulation rules and guidelines established by the Japan Virtual Currency Exchange Association” (JVCEA).
JVCEA is the industry’s self-regulatory body, which has been working closely alongside regulators at the Financial Services Agency (FSA) in recent months, as the industry catches up with new laws for crypto operators. These form part of Japan’s commitments to international standards of regulation, with the government having “…reaffirm(ed) (their) commitment to applying the recently amended FATF Standards to virtual assets and related providers for AML (anti-money laundering) and CFT (anti-terrorist finance),” pledged at the recent G20 meetings held in the country.
The FATF Standards are specifically designed as a coordinated international response to financial risks, including money laundering, terrorist financing, and risks to the wider financial system.
The interpretation of regulators in Japan will require firms to tighten up still further on compliance, including reducing the opportunities for margin crypto trading in future.
With leveraged crypto trading firmly in the sights of regulators worldwide, the move from Coincheck is likely to be an indication of things to come, as new regulation attempts to stabilize unruly speculation on cryptocurrencies.
In a warning to users of its platform, Coincheck said margin requirements remain subject to change.
The amount of margin required will change constantly, so please check the latest information at your own risk.
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