Japan is preparing to extend insider-trading rules to cryptocurrency markets, a significant step toward aligning crypto regulation with traditional securities oversight.
Under the plan, the Securities and Exchange Surveillance Commission (SESC) would gain authority to probe suspicious crypto trades and impose penalties or refer serious cases for criminal prosecution.
Currently, Japan’s Financial Instruments and Exchange Act (FIEA) does not cover digital assets in its insider trading provisions. That leaves crypto markets largely outside the scope of enforcement.
In addition, the self-regulatory Japan Virtual and Crypto Assets Exchange Association (JVCEA) lacks robust surveillance systems to detect illicit trades, prompting calls for new legal safeguards.
According to a Nikkei Asia report cited by multiple media outlets, the Financial Services Agency (FSA) plans to convene a working group by late 2025 to design the details of the framework. The goal is to submit amendments to the FIEA during the 2026 parliamentary session.
Under the proposed rules, punishments could include fines based on the illicit gains made from trading, with criminal charges reserved for more egregious violations. One major challenge for regulators will be defining who qualifies as an “insider” in the crypto world.Â
Many tokens lack a centralized issuer or management structure, making it difficult to ascertain who holds privileged information. Nevertheless, early drafts are expected to enumerate specific scenarios, for example, trading ahead of an unannounced exchange listing or knowledge of undisclosed security vulnerabilities.
Japan’s move comes amid rapid growth in retail crypto participation, reportedly over 7.8 million active trading accounts, about a fourfold rise in five years.
As the nation aims to bolster investor trust and market integrity, regulators believe this crackdown could help reduce unfair advantages and strengthen the legitimacy of crypto as a regulated asset class.