On May 30, opening of one more Japanese cryptocurrency exchange is scheduled. On this day, Taotao platform will be launched, with 40% of its shares belonging to the US-based Yahoo. What excites most: it will offer cryptocurrency margin trading and fiat trading.
Japan is one of the few countries where cryptocurrency trading is legal. This does not mean that anyone can start crypto trading platform here. Just the opposite. The Financial Services Agency of Japan (FSA) closely monitors the market, and currently only 19 companies have Japanese operating license. While more than a hundred of companies are in a kind of ‘waiting list’ with their applications being under long-lasting consideration.
To enter the Japanese market, Yahoo acquired BitARG for $19 million, according to unofficial data. After the reorganization, the website will operate under the Taotao brand.
FSA tightly controls the cryptocurrency turnover, however allowing companies sufficient operational freedom. Thus, primary control is exercised through a self-regulating association. It collects feedback from market actors and delivers it to the FSA to foster development of new legislations.
The most important problem for the cryptocurrency market is setting limits for margin trading. An upcoming feature of Taotao is usage of leverage from the very start. And, from now on, this service will be available only for Bitcoin, Ethereum and Ripple.
The use of leverage significantly increases the yeld potential of stock trading. But at the same time, the risks of capital loss increase in times of high volatility.
To understand the possible risks, there is one thing worth mentioning: between May 20 and May 27, the price of Bitcoin increased by 17%. That is, even a 1: 5 leverage could theoretically make it possible to earn as much as 85% of the profits in these seven days. But the opposite situation is also possible, the trader could use sell orders. In this case, his deposit will be only 15% of the initial level. Therefore, margin trading is not recommended for investors who are new to the margin trading.
As investors’ fascination for cryptocurrencies, their agitation for cryptoexchange services with margin trading grows and their management is well aware of this. Perhaps the most significant event in the industry will be the transition of Binance to technology 2.0.
The head of Binance Exchange Changpeng Zhao, CZ said that a total upload of his cryptoexchange is under completion. The launch of the platform Binance 2.0, which will allow to apply leverage, is widely anticipated.
Increased concern in margin trading with cryptocurrencies was the result of several factors at once. The asset was able to prove its worth, its fans got more experience and data for analysis. Now they are striving to realize these knowledge for increasing profit margins, and cryptocurrency exchanges are going to meet the demand.