Japan is moving to tighten its cryptocurrency oversight by introducing a ban on insider trading, treating digital assets more like traditional securities. The new rules, spearheaded by the Financial Services Agency (FSA) and the Securities and Exchange Surveillance Commission (SESC), are expected to come into force by 2026. Once implemented, trading cryptocurrencies based on non-public or privileged information will be deemed a criminal offence.
According to a report by Nikkei Asia, the planned legislation will empower the SESC to investigate violations, impose fines, and refer serious cases for criminal prosecution. Those found guilty could face substantial penalties depending on the scale of their misconduct. The SESC will also be allowed to impose surcharges on illicit profits earned through such trades, similar to enforcement measures already in place for traditional securities.
To ensure clarity, the FSA plans to set up a specialised working group before the end of this year to define what constitutes insider trading in the crypto market. Likely examples include trading tokens ahead of a public exchange listing or using confidential knowledge of an undisclosed security flaw to gain a financial edge. In addition, crypto exchanges operating in Japan will be required to establish stronger compliance systems, adopt transparent trading mechanisms, and implement internal controls designed to prevent the misuse of privileged information.
Japan’s crypto sector has grown rapidly, boasting more than 7.8 million active trading accounts as of August 2025—nearly quadruple the figure recorded five years earlier. With such expansion, regulators are increasingly concerned about ensuring fairness, transparency, and investor protection. Presently, most crypto oversight in Japan relies on self-regulation by exchanges under the Japan Virtual and Crypto Assets Exchange Association. However, the upcoming reforms aim to shift regulatory responsibility from the Payment Services Act to the more stringent Financial Instruments and Exchange Act (FIEA), aligning crypto assets with traditional financial instruments.
By adopting this approach, Japan seeks to bring its crypto regulations in line with global standards, particularly as US authorities continue to probe market manipulation and insider activity in spot crypto trading. The move underscores Tokyo’s intention to establish a safer and more credible digital asset market, balancing innovation with investor confidence.
