Business News Report Technology
July 27, 2026

Strict 2x Crypto Leverage Limits Driving Capital Away From Japan, Senior LDP Official Warns

In Brief

Japanese LDP lawmaker Seiji Kihara calls for easing strict 2x crypto leverage limits to restore liquidity and attract capital back to Japan.

Strict 2x Crypto Leverage Limits Driving Capital Away From Japan, Senior LDP Official Warns

A senior lawmaker from Japan’s ruling Liberal Democratic Party has publicly advocated for relaxing the country’s strict cryptocurrency leverage limits, arguing that the current 2x cap is overly restrictive and detrimental to market health. Seiji Kihara, who chairs the LDP’s Next-Generation AI and On-Chain Finance Project Team, told a financial summit in Tokyo that sufficient liquidity and a functioning price mechanism are essential for the crypto market’s development, and that deregulation represents an unavoidable trend. According to a July 27 report by Nikkei, Kihara said the existing leverage ceiling has constrained trading activity and contributed to a migration of capital away from Japanese venues, urging policymakers to pursue reforms that would restore competitiveness.

Kihara’s proposal centers on the premise that Japan’s conservative margin rules place domestic exchanges at a structural disadvantage compared with global counterparts, limiting both price discovery and market depth. By easing leverage restrictions, the government could encourage trading volumes to return to domestic platforms while simultaneously signaling to international investors that Tokyo is open to deeper crypto capital formation. The lawmaker emphasized that attracting overseas funds is a core objective of his project team’s current work, suggesting that leverage reform is not merely a technical adjustment but a strategic priority for Japan’s broader financial policy agenda.

Implications for Japan’s Crypto Competitiveness

The push for deregulation marks a notable shift in tone from a country that has historically prioritized consumer protection following early exchange failures. While Japan’s regulatory framework is widely regarded as one of the most structured globally, policymakers increasingly appear concerned that excessive caution is driving activity toward more permissive jurisdictions. Kihara’s remarks indicate that leverage limits will be a focal point in upcoming policy discussions as the LDP seeks to strengthen the domestic crypto industry’s global standing.

For market participants, the proposed changes raise practical questions about where new leverage thresholds might be set and how consumer safeguards would be maintained alongside greater trading flexibility. Should the reforms advance, Japan could transition from a defensive regulatory posture to one that actively competes for crypto market share through structural liberalization. The coming months are likely to determine whether Kihara’s vision of deregulation as an “unavoidable trend” translates into concrete legislative action or remains a strategic talking point within the party’s broader digital asset roadmap.

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About The Author

Alisa, a dedicated journalist at the MPost, specializes in crypto, AI, investments, and the expansive realm of Web3. With a keen eye for emerging trends and technologies, she delivers comprehensive coverage to inform and engage readers in the ever-evolving landscape of digital finance.

More articles
Alisa Davidson
Alisa Davidson

Alisa, a dedicated journalist at the MPost, specializes in crypto, AI, investments, and the expansive realm of Web3. With a keen eye for emerging trends and technologies, she delivers comprehensive coverage to inform and engage readers in the ever-evolving landscape of digital finance.

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