Japan Considers Easing Crypto Leverage Limits to Boost Market Liquidity

Seiji Kihara, who heads the Liberal Democratic Party’s Next Generation AI and On-Chain Finance Project Team, signaled that the existing margin requirements are hindering market activity. Speaking at a financial conference in Tokyo on July 14, Kihara argued that a healthy digital asset ecosystem necessitates more flexibility than the current framework allows. His team is now evaluating policy changes aimed at drawing capital back to domestic platforms by loosening these stringent controls.

The push for higher leverage limits follows significant legislative shifts, including the reclassification of cryptocurrencies as financial products under the Financial Instruments and Exchange Act. This broader regulatory overhaul introduces stricter insider trading rules and higher penalties for unregistered operations, while simultaneously paving the way for lower tax rates and the potential introduction of domestic Bitcoin ETFs by 2028. While major institutions like SBI Securities and Nomura are already preparing for these product launches, regulators have yet to set a specific timeline for the proposed leverage adjustments. For now, the focus remains on integrating digital assets into Japan’s established financial infrastructure to foster long-term growth.