Japan LDP lawmaker Seiji Kihara pushes easing of 2x crypto leverage cap

Japan’s ruling party is considering easing the country’s 2x cap on crypto leverage trading, with Liberal Democratic Party lawmaker Seiji Kihara saying the current limit is too restrictive for market liquidity and price discovery. Kihara, who heads the party’s Next Generation AI and On-Chain Finance Project Team, said at a financial conference in Tokyo on July 14 that relaxing the rule would be a natural step if Japan wants to strengthen its domestic cryptocurrency market. The discussion remains part of an ongoing policy process rather than a finalized rule change, and no revised leverage threshold or implementation timetable has been reported. Japan currently limits leverage to two times posted margin, one of the strictest caps among major crypto markets. The proposal now sits alongside a wider regulatory overhaul. Amendments to the Financial Instruments and Exchange Act approved earlier this month reclassify cryptocurrencies as financial products instead of primarily treating them as payment instruments under the Payment Services Act. The changes introduce insider trading rules for crypto transactions, require annual disclosures from issuers of certain crypto assets and raise penalties for operating without registration. CoinPost reported that the maximum prison sentence for operating an unregistered crypto business will increase from three years to 10 years, while the maximum fine will rise from 3 million yen to 10 million yen. The amended law also creates the legal basis for separate taxation of crypto gains at an effective rate of about 20% and a three-year loss carry-forward deduction, with those tax changes expected in January 2028 because enforcement is scheduled during the 2027 fiscal year. The same legislative push has also advanced plans for domestic cryptocurrency ETFs. Nikkei has reported that the first domestic Bitcoin ETF could launch as early as 2028 once investment trust rules are revised, though the legal amendments themselves do not yet authorize immediate listings. Japan Exchange Group Chief Executive Hiroki Yamamichi has said a crypto ETF could be introduced once the legal framework and tax treatment are completed.