Japan Moves to Crack Down on Crypto Insider Trading With New Regulatory Framework

Securities regulator to gain power to investigate and fine violators

Japan is preparing to introduce new rules targeting crypto insider trading, marking a major step toward aligning digital asset markets with traditional securities oversight.

According to a Nikkei Asia report on Tuesday, the Securities and Exchange Surveillance Commission (SESC) will soon be empowered to investigate suspicious trading activity and impose fines based on insider trading profits. In severe cases, the regulator will also be able to refer offenders for criminal prosecution.

Currently, no explicit insider trading provisions exist for cryptocurrencies under Japan’s Financial Instruments and Exchange Act (FIEA). The Japan Virtual and Crypto Assets Exchange Association (JVCEA) — the country’s self-regulatory body — also lacks an effective surveillance system to detect suspicious trades. The new framework aims to close these regulatory gaps and enhance market transparency.

New laws expected by 2026

Japan’s Financial Services Agency (FSA), which oversees the SESC, will finalize the framework through a working group by the end of 2025, with a proposed FIEA amendment expected next year.

One challenge regulators face is identifying “insiders” in crypto projects, as many tokens lack identifiable issuers or centralized management, making insider tracking complex.

Still, the move reflects Japan’s increasing commitment to sensible and investor-focused crypto regulation, following a surge in local participation. The number of registered Japanese crypto users has grown fourfold to 7.88 million in the past five years — roughly 6.3% of the country’s population.

Political and economic tailwinds for crypto adoption

The timing coincides with expectations that Sanae Takaichi, a pro-technology politician, will become Japan’s next prime minister. Takaichi is known for advocating “technological sovereignty,” blockchain innovation, and lower interest rates, which could further boost capital inflows into Japan’s crypto markets.

Earlier this year, the FSA proposed moving crypto oversight under the FIEA, shifting away from the Payments Services Act to give digital assets the same regulatory treatment as securities. The goal is to strengthen investor protection and curb market manipulation, scams, and misleading disclosures.

Disclaimer

This content is for informational purposes only and does not constitute financial, investment, or legal advice. Cryptocurrency trading involves risk and may result in financial loss.