Japan is taking steps to strengthen regulation of the cryptocurrency market: The Financial Services Agency (FSA) plans to ban insider trading of digital assets by including them in the Financial Instruments and Exchange Act (FIEA). This initiative will equate cryptocurrencies with traditional securities, filling gaps in the existing Payment Services Act, which lacks provisions against insider trading.
According to Nikkei, the Securities and Exchange Surveillance Commission (SESC) will gain the authority to investigate suspicious transactions, impose fines linked to illegal profits, and refer cases to court. Violators will face criminal liability. The bill is expected by the end of 2025, with submission for parliamentary consideration in 2026.
Experts note the challenges: the decentralized nature of many tokens complicates the identification of "insiders" — unlike stocks with a clear issuer. Examples of violations will include trading based on non-public information about token listings or exchange vulnerabilities. The FSA plans to issue detailed recommendations to clarify the rules.
This reform, inspired by IOSCO recommendations, will enhance investor confidence and encourage institutional adoption of crypto in Japan, where there are already 12.4 million users. The crypto market will become more transparent, reducing manipulation and attracting global capital. Japan continues to lead in Asian regulation, balancing innovation with protection.
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