Japan has begun preparing comprehensive regulations aimed at banning insider trading in cryptocurrency markets.
According to reports, the Financial Services Authority (FSA) is planning to introduce regulations explicitly prohibiting cryptocurrency trading based on non-public information. The new law would impose fines proportional to the amount of illicit profits made by those violating the ban.
The Securities and Exchange Supervision Commission (SESC) will also have the authority to investigate suspicious transactions and recommend fines or criminal penalties. The FSA reportedly aims to finalize the regulatory details by the end of the year and submit the proposed legislation to next year's regular parliamentary session.
Currently, Japan’s Financial Instruments and Exchange Act does not contain provisions for insider trading for crypto assets, leaving oversight largely to the self-regulation of crypto exchanges and industry associations.
However, regulators emphasize that defining insider trading in crypto assets is more complex than traditional securities. Many tokens don't have a specific issuer, making it difficult to define “insider.”
Japan has recently begun tightening its cryptocurrency market. Last week, Binance Japan announced a capital and business partnership with payments giant PayPay Corporation, and it was announced that PayPay had acquired a 40% stake in the local stock exchange.
This new step is considered part of Japan's effort to bring crypto markets closer to traditional financial standards.