Japan is preparing to ban cryptocurrency insider trading under new rules that will treat digital assets like traditional securities. The Financial Services Agency (FSA) and the Securities and Exchange Surveillance Commission (SESC) are leading the initiative to strengthen oversight of crypto transactions.
According to Nikkei Asia, such legal amendments will be presented in parliament in 2026. In the new system, it will be a crime to trade cryptocurrencies using non-public or privileged information.
Offenders can be fined or charged with a crime depending on the magnitude of the offense. The SESC will have the authority to probe suspected cases and is allowed to charge surcharges on illegal profits.
Defining Insider Trading in Crypto
The FSA plans to form a working group by the end of this year to define what constitutes cryptocurrency insider trading.
Examples may include trading tokens before a public exchange listing or acting on knowledge of an unreported security flaw. Exchanges will also be required to have compliance processes to discourage abuse and to have transparent trading processes.
The crypto market in Japan has expanded at a high rate, with more than 7.8 million active trading accounts by August 2025, almost four times more than five years ago.
The regulators are striving to bring crypto investments in line with current securities regulations that emphasize transparency and protection of investors. The existing regulation is based on self-regulation by exchanges and the Japan Virtual and Crypto Assets Exchange Association.
The new regulations will change the regulatory approach to crypto assets, which is the Payment Services Act, to the Financial Instruments and Exchange Act (FIEA).
This step puts Japan in line with the rest of the world, where U.S. regulators are investigating spot crypto trading, and seeks to create a stable market that will be internationally acceptable.