Japan Moves to Ban Cryptocurrency Insider Trading Under New Regulatory Framework

Japan is set to criminalize cryptocurrency insider trading through a new legal framework that will regulate digital assets similarly to traditional securities. The initiative, led by the Financial Services Agency (FSA) and the Securities and Exchange Surveillance Commission (SESC), aims to strengthen market transparency and protect investors in the country’s fast-growing crypto industry.

According to a report by Nikkei Asia, the proposed legislation will be submitted to parliament in 2026. It will prohibit trading cryptocurrencies based on undisclosed or privileged information, with penalties ranging from fines to criminal charges depending on the severity of violations. The SESC will be granted the authority to investigate suspected insider trading cases and impose surcharges for illicit gains.

Authorities believe the move will restore trust and fairness in Japan’s expanding digital asset market, where institutional participation continues to rise. Financial giant Nomura, for instance, is reportedly in discussions with the FSA through its subsidiary, Laser Digital, to secure a crypto trading license.

By the end of 2025, the FSA plans to establish a working group to define what constitutes insider trading in the crypto sector. Actions such as trading tokens before an exchange listing announcement or exploiting unreported security vulnerabilities may fall under the new restrictions.

The updated framework will also require crypto exchanges to strengthen compliance measures to prevent abuse. Japan’s crypto market, which now boasts over 7.8 million active accounts—nearly quadruple the figure from five years ago—has so far relied heavily on self-regulation by the Japan Virtual and Crypto Assets Exchange Association.

This reform will shift crypto asset regulation from the Payment Services Act to the Financial Instruments and Exchange Act (FIEA), aligning Japan’s policies with global efforts by regulators like the SEC and CFTC. The move marks a major step toward building a transparent, trustworthy, and globally integrated cryptocurrency market.