A lawmaker from Japan’s ruling Liberal Democratic Party is calling for the country to relax its strict limits on cryptocurrency trading leverage. Seiji Kihara said at a financial summit in Tokyo that the current 2x leverage cap is too restrictive and that he plans to push for regulatory changes. Kihara leads the LDP’s Next-Generation AI and On-Chain Finance Project Team, which is working on policies aimed at improving liquidity and attracting crypto-related investment to Japan.
Kihara argued that sufficient liquidity and reliable price formation are needed for the crypto market to develop. His comments come as Japan considers more changes to its digital asset rules, including plans to treat crypto assets more like financial products under its securities framework. Any move to raise leverage limits would likely be closely watched by exchanges and traders, but it could also increase concerns about investor risk and market volatility.
Ruling party official Seiji Kihara says Japan’s 2x crypto margin trading cap is “too restrictive” and needs to be relaxed 🚨
– Goal: Restore domestic market liquidity and price discovery
– Impact: Bring capital back to Japanese registered CEXs pic.twitter.com/LvfzxAcN3G
— The Moon Show (@TheMoonShow) July 27, 2026
Could higher leverage help Japan compete for crypto trading?
Japan’s leverage rules have long been stricter than those in many other major crypto markets, potentially making the country less attractive to active traders and some exchanges.
Raising the cap could make Japanese platforms more competitive and encourage more trading activity, but it would also require regulators to balance market growth with stronger investor protections. The debate could become part of a larger question for Japan, whether its crypto rules should focus more on attracting global capital or keeping retail trading risks tightly controlled.
READ ALSO: Crypto Kingpin “Hu Shi” Arrested in Japan Over Alleged Global Fraud Network
What crypto rules are lawmakers pushing in other countries?
In the US, lawmakers have been working on the CLARITY Act, which aims to define when crypto assets fall under the SEC or CFTC and create clearer rules for crypto market structure. In the UK, lawmakers have backed plans to bring crypto trading and stablecoins under financial services regulation, while the EU’s MiCA framework has already established rules for crypto issuers and service providers across the bloc.
These efforts show that lawmakers are not only debating whether crypto should be regulated, but also how the rules can support market growth. If major economies make it easier for crypto businesses and traders to operate legally, competition between jurisdictions could increase, with regulation becoming a factor in where exchanges, investors, and crypto companies choose to do business.
Additionally, Japan could see its first Bitcoin exchange-traded fund (ETF) by 2028, potentially opening the door for trillions of yen in new investment as pension funds and other institutional investors look for ways to diversify their portfolios.
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