Private Japanese Cryptocurrency Exchanges to Impose Limits on Small Investors

The Japan Virtual Currency Exchange Association (JVCEA), which is a private organization that self-regulates the country's cryptocurrency exchanges, has reportedly imposed trading limits for clients who are considered small investors. The purpose of the policy is to limit the trades of small investors who might have insufficient assets to weather significant trading losses. So far, the JVCEA has not specified exactly what limits will be placed on trades, nor has it defined what exactly is a small investor. Digital currency exchanges that are members of the JVCEA will have two options when it comes to imposing trading limits. One option exchanges can chose is applying a single limit for all its small investors. The other option exchanges will have is imposing limits per investor, based on a wide range of factors that include investor income, assets, trading experience and the age of the investor. The organization has further indicated that it wants to limit trading among minors. Such traders would require parental permission to remove the limits. The JVCEA sees this as a way to prevent money laundering. It has been a busy week for the JVCEA. Just a few days earlier the organization announced plans to impose limits on margin trading at its member exchanges. The purpose of this measure was also to protect investors in what many consider a very volatile trading environment. The organization, which was created in March of this year, has 16 cryptocurrency exchanges as members. The purpose of the organization was to establish and maintain policies and standards for operating safe and secure digital currency exchanges. Its creation came about in response to the hacking earlier this year of the Japanese cryptocurrency exchange Coincheck, which led to losses in excess of $500 million. The JVCEA hopes to self-regulate digital currency exchanges in the country in cooperation with Japan's Financial Services Agency (FSA), which is a government organization that was recently reshaped specifically to better regulate cryptocurrencies and other forms of fintech.