Japan to Implement Sweeping Ban on Crypto Insider Trading by 2026

Japan Moves to Bolster Crypto Market Integrity

Japan is poised to enact stringent regulations against insider trading in the cryptocurrency market, with the Securities and Exchange Surveillance Commission (SESC) and the Financial Services Agency (FSA) spearheading the initiative. The new framework, expected to be enforced by 2026, aims to bring digital assets under the purview of the Financial Instruments and Exchange Act (FIEA), aligning them with traditional financial instruments.

This regulatory overhaul seeks to close existing loopholes where insider trading laws did not explicitly cover cryptocurrencies, which were previously primarily governed by the Payment Services Act. The shift reflects a growing recognition of cryptocurrencies as investment vehicles rather than solely for payment purposes.

Expanded Powers for Regulators

Under the forthcoming regulations, the SESC will be granted significant new authority. This includes the power to investigate suspicious trading activities, issue surcharge recommendations based on illicit gains, and refer serious violations for criminal prosecution.

The move is intended to transition oversight from the current self-regulatory model, primarily managed by cryptocurrency exchanges and the Japan Virtual and Crypto Assets Exchange Association (JVCEA), to direct government enforcement. Regulators have expressed concerns that the existing self-monitoring systems are insufficient for fully tracking complex transactions and detecting unfair practices.

Defining Insider Trading in the Digital Realm

The FSA plans to finalize the details of the new framework by the end of 2025, with proposed amendments to the FIEA to be submitted in the next parliamentary session. This process will involve defining what constitutes 'inside information' in the context of digital assets.

Examples of actions that could be prohibited include:

• Purchasing a token before its official listing on an exchange.
• Utilizing private information regarding a token's security vulnerabilities for personal profit.

The objective is to establish clear rules that prevent individuals from gaining an unfair advantage through non-public information, mirroring the regulations applied to stocks and bonds.

Boosting Investor Confidence in a Growing Market

The push for stricter regulations comes amid a rapid expansion of Japan's cryptocurrency market. The country has seen a substantial increase in active crypto accounts, reaching approximately 7.88 million as of August 2025, a fourfold increase over five years.

By enhancing transparency and fairness, Japanese authorities aim to boost investor confidence and solidify Japan's position as a trusted hub for digital asset investment in Asia. This initiative also aligns with a broader global trend towards increased regulatory oversight in the cryptocurrency sector.