Japan is set to introduce stricter regulations for its cryptocurrency sector, including a ban on insider trading, as part of a broader effort to align digital asset oversight with traditional financial markets.
The new measures, led by the Financial Services Agency and the Securities and Exchange Surveillance Commission, are expected to come into effect by 2026.
Once enacted, the regulations will make it a criminal offence to trade cryptocurrencies using non-public or privileged information.
This move is intended to treat digital assets under similar legal standards as conventional securities, targeting transparency and market fairness.
Citing a report from Nikkei Asia, the legislation will grant the SESC the authority to investigate potential breaches, impose administrative fines, and refer serious infractions for criminal prosecution. The commission will also be able to enforce surcharges on illicit gains obtained through insider trading, mirroring enforcement tools already used in Japan’s securities market.
To provide clarity on how insider trading applies to digital assets, the FSA will establish a dedicated working group before the end of the year. The group will be tasked with outlining what constitutes insider activity in the crypto space. Possible examples include trading ahead of token listings on public exchanges or exploiting confidential information about undisclosed security vulnerabilities.
In addition to legal reforms, cryptocurrency exchanges operating in Japan will be required to upgrade their internal systems. This includes enhancing compliance frameworks, improving transparency in trading operations, and implementing controls to guard against the misuse of sensitive information.
As of August 2025, Japan’s crypto industry had over 7.8 million active trading accounts—nearly four times more than five years ago. This rapid growth has heightened regulatory concerns about protecting investors and maintaining orderly markets. Until now, oversight has largely depended on self-regulatory practices led by the Japan Virtual and Crypto Assets Exchange Association.
Under the proposed reforms, regulatory responsibility will shift from the Payment Services Act to the more comprehensive Financial Instruments and Exchange Act (FIEA). This change is intended to tighten oversight and bring Japan’s crypto regulation in line with international standards, especially as global scrutiny of crypto market manipulation continues to rise.
By reinforcing its legal framework, Japan aims to foster a more secure and trustworthy environment for digital asset trading, balancing innovation with robust investor protection.
