As part of self-regulatory efforts, Japan Virtual Currency Exchange Association (JVCEA) may require its member exchanges to impose limits on the trading activity of some of its clients in other to protect them from huge losses.
According to a report on cryptocurrency news outlet Cointelegraph Japan, the self-regulatory body which is a group of registered cryptocurrency exchanges in the country has told its members to imposes a cap on trading volumes of customers who have small investments in digital assets. Not only will the measure prevent heavy losses, it is also expected to address the problem of excessive basis daily expenses.
Although the report did not specify what range of investment was “small”, it gave guidelines on how crypto exchanges can set and implement the trading limits. Member exchanges will choose between two implementation options.
In the first case, it suggested a universal trading cap for all customers who fall under the “small asset” category. For the second option, exchanges can set different limits for different categories of investors. Besides the value of their assets, investors could be categorized according to age, income, experience in investing.
Last week also, the JVCEA recommended a similar restriction on the margin trading in which crypto traders buy or sell more coins than they actually own or can afford. Like in this case, the reason for this is to prevent customers from incurring heavy losses, as cryptocurrency markets can be very volatile.
These are in line with a series of recent recommendations the JVCEA have released to regulate cryptocurrency operations in the country. The body was created after the cryptocurrency community in Japan was rocked with the biggest cryptocurrency heist in January.
As the Financial Service Agency (FSA), responsible for the regulation of crypto activities in the country, went about strengthening regulations, 16 registered exchanges in the country agreed to adopt self-regulatory guidelines.