FSA, the Japanese agency for financial services, has proposed to halve the leverage in cryptocurrency trading from 4 to 2; the proposal was put forward today and, if approved, it would represent the first similar case in the country.

Previously, in fact, there was no regulation on the matter, however the scenario is constantly evolving and many observers think it is almost obvious that this law will be approved, becoming operational from spring, around the month of April.

However, the FSA said it was available to evaluate any objections and will collect comments on the proposal until February 13th; the prevailing orientation, however, is to protect small investors from the risk of accumulating excessive losses, well beyond their availability.

Moreover, as is known, the cryptocurrency market is not suitable for that type of operation, since it is characterized by high volatility and that market manipulation is on the agenda; the feeling, specifically, is that Japan has moved to follow the initiatives taken by the European community, which has in fact already reduced the margin to 2x for some time, just to protect small savers who operate through authorized brokers.

Contrary to what one might believe the cryptocurrency community is not at all opposed to this type of regulation, on the contrary, one of the advice normally more present in the various forums, that the more experienced traders damage to newbies, is never to operate leveraged, precisely because very solid skills are required for this type of operation, otherwise the risk is to get very, very bad; unfortunately, however, many newbies prefer to ignore this kind of advice, arrive on the market full of expectations and see leverage as an opportunity to get rich quickly.

What happens, therefore, is that they manage to use huge levers, well in excess of four times, ending up losing all their investment in a matter of minutes as soon as volatility explodes in the opposite direction to that they had bet on; It is not even uncommon for people who had made good money by operating without leverage for some time suddenly, feeling confident of themselves, to start operating using levers and thus squandering the profits accumulated up to then in a short time.

Whether there is an ad hoc regulation or not, therefore, the advice is always the same, avoid operating with financial leverage also because, if you are capable, you will still be able to accumulate profits, perhaps more slowly, but certainly in a more secure way .