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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 plan to tighten oversight of crypto transactions.
Japan Drafts New Legal Framework to Criminalize Cryptocurrency Insider Trading
The proposed legal changes are expected to be submitted to parliament in 2026, according to a report by Nikkei Asia. The new framework will criminalize the trading of cryptocurrencies using non-publicized or favorable information.
Depending on the level of violations, offenders would be pay fines or be charged with a criminal offense. The SESC will have the authority to investigate on probable cases of insider trading on cryptocurrencies and recommend surcharges in case of illicit gains.
Authorities believe the move will help restore trust and fairness in Japan’s rapidly growing cryptocurrency market. Here, trading demand continues to surge among local institutions like Nomura. Hence, it is no wonder the firm (through its subsidiary Laser Digital) is in early talks with Japan’s FSA to receive a crypto trading license.
The FSA will form a working group by the end of this year to define which actions qualify as cryptocurrency insider trading. For example, trading tokens before the public announcement of an exchange listing or after learning of an unreported security flaw could fall under this law.
Japan Wants A Tighter Rein On Crypto Trading Activities
The latest draft will also disclose compliance procedures for crypto exchanges to avoid abuse. The crypto market in Japan has been growing at a rapid pace.
Regulators now want to align crypto investments with existing securities laws that emphasize transparency and investor protection. Over 7.8 million active trading accounts have been registered as of August 2025.
This is almost four times higher than five years ago. The report stated that current oversight depends largely on self-regulation by exchanges and the Japan Virtual and Crypto Assets Exchange Association.
Japan Joins Other Authorities In the Campaign Against Crypto Insider Trading
This incoming regulation will also alter the regulatory framework of crypto assets from the Payment Services Act to the FIEA. This aligns broader global efforts such as the SEC and CFTC opening the door to U.S. spot crypto trading.
It is a shift that will mark a change in the categorization of digital currencies in Japan. The proposal by Japan will be a milestone towards developing an open and reliable crypto market that is compatible with global standards.
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