According to a recent report from Nikkei Asia, Japan is working on drafting regulations to ban insider trading in the crypto market. Under the plan, the Financial Services Agency (FSA) will submit amendments to the Financial Instruments and Exchange Act (FIEA), most likely by 2026. The amendments will explicitly prohibit trading of cryptocurrencies based on non-public or privileged information.
The shift places enforcement largely with the Securities and Exchange Surveillance Commission (SESC), which reports to the FSA. The proposed framework grants SESC the power to investigate suspicious crypto trades, impose fine-like surcharges on illicit profits, and refer serious violations for criminal prosecution. Definitions will be clarified by a working group convened by end-2025.
Impact on Japan’s crypto industry
If passed, the new regime would mean that crypto tokens, especially those with upcoming listings, major announcements, or access to undisclosed risk information (like security vulnerabilities), would be treated more like traditional securities.
Exchanges will likely face stricter disclosure obligations and monitoring requirements. For investors and trading firms, this could mean increased compliance costs and greater legal risk. But proponents argue that stronger rules will boost market integrity and investor confidence, making Japan more attractive for serious crypto players.
Past incidents of insider trading in Japan
Japan has a history of insider trading enforcement, though mostly in traditional securities. For example, Soichiro Sato, a former FSA employee and judge, was sentenced in early 2025 to two years in prison for trading tender offers before they were public. In another case, a Tokyo Stock Exchange employee and his father were convicted in 2025 after the misuse of non-public corporate information.
Japan has always taken insider trading seriously under FIEA. Now, with these new rules, expanding to the crypto market will help fix the gap in oversight.