Japan to Limit Margin Leverage for Margin Trading

These measures are designed to protect investors from the activities of financial pyramids
20 March 2019   439

Japanese cryptocurrency exchanges will be forced to limit leverage for margin trading in digital currencies. If earlier the maximum limit for such instruments was x25, now the leverage should not exceed the size of the initial deposit more than 4 times. This is stated in the amendments to the law "On financial instruments and stock exchanges", approved by the Japanese Council of Ministers, the Nikkei reports.

It is assumed that the new rules will come into force in April 2020. Within 18 months from now, all cryptoexchanges that provide margin trading services will be required to register. Otherwise, they will lose their license and will not be able to continue operations in the country.

The adopted amendments are designed to protect investors from the activities of financial pyramids.

On March 14, the Canadian Securities Authority (CSA) and the Investment Industry Regulatory Organization (IIROC) proposed to prohibit crypto exchanges to increase leverage for margin traders, as well as to restrict the possibility of opening short positions.

Experts explained their recommendations by the “potentially manipulative or misleading” nature of these operations.

In February the Maltese cryptobirth OKEx increased the size of leverage from 3x to 5x.

Fake Trading Share to Reach 68%, - FTX Global

This figure, however, is significantly lower than what Bitwise's report and the discrepancy is explained by the difference in methodology
04 July 2019   974

The exchange of derivatives FTX Global and Alameda Research conducted a study that estimated the volumes of fictitious transactions (wash trades), presumably prevailing in many cryptocurrency exchanges.

The report says that 68.6% of trading volumes displayed by CoinMarketCap are fake. This figure, however, is significantly lower than what Bitwise Asset Management announced in March.

The discrepancy between the results in almost 30% of the authors of the new study is explained by the difference in methodology. So, FTX Global is sure that Bitwise used an too strict approach to data analysis, which is why a significant proportion of real trading volumes fell into the category of fake ones.

While our methods are not foolproof, we believe they paint the most accurate picture of the true nature of cryptocurrency trading volume that anyone has made publicly available as of yet.
 

FTX Global Team

The Alameda methodology involves verifying the authenticity of data on trading volumes on various exchanges based on six different parameters, including manual verification of information and comparison of order books.

FTX Global Website
FTX Global Website

In particular, the experts found out that some sites provided data on the volumes of foreign exchanges for their own, with a slight delay in time. Other platforms used more advanced techniques - for example, they introduced large fake volumes only against the background of many smaller orders, thus trying to hide the true state of affairs.

The main purpose of these tactics is to raise the platform higher in the CoinMarketCap rating, creating a false impression of its liquidity. It also sometimes allows for the ability to charge a higher listing fee.