According to Nikkei Asia, the Securities and Exchange Surveillance Commission (SESC) will soon be granted authority to investigate suspicious trades, impose fines, and refer severe violations for criminal prosecution.

Currently, the Financial Instruments and Exchange Act (FIEA) lacks provisions addressing insider activity in crypto, leaving oversight largely to the self-regulated Japan Virtual and Crypto Assets Exchange Association – which has struggled to detect or prevent illicit trading. The new measures aim to close that gap and align crypto oversight with the country’s strict securities framework.

The Financial Services Agency (FSA) plans to finalize the details of the framework by late 2025, targeting a legislative proposal for next year. Analysts note that enforcement will be complex, as many crypto projects have no central issuer, complicating the definition of “insider” within decentralized ecosystems.

The regulatory push comes as Japan’s crypto user base has surged to nearly 7.9 million – roughly 6.3% of the population – reflecting the growing need for investor protection.

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Meanwhile, political shifts could give Japan’s crypto sector new energy. Sanae Takaichi, widely expected to become the country’s next prime minister, has voiced support for blockchain innovation, technological sovereignty, and pro-growth economic policies. Her leadership could blend stricter oversight with an openness to fintech advancement, potentially drawing more capital into Japan’s digital asset markets.

Earlier this year, the FSA also proposed moving crypto regulation under the FIEA, strengthening legal protections against fraud, security breaches, and unlicensed activity – a move that would bring Japan’s crypto rules closer to those governing traditional financial markets.

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