Japan’s top finance sector regulator, the Securities and Exchange Surveillance Commission (SESC), is planning to introduce regulations banning insider trading of digital assets. Offenders would be fined based on the amount they gain through illicit transactions.
According to a report by local outlet Nikkei Asia, under new rules currently being worked on by the Financial Services Agency (FSA), the SESC’s parent organization, the latter will soon be authorized to investigate, issue surcharge recommendations, and make criminal referrals in the case of suspected insider trading of digital assets.
Currently, insider trading rules under Japan’s Financial Instruments and Exchange Act (FIEA) do not apply to digital assets, with the country relying on digital asset exchanges and the Japan Virtual and Crypto Assets Exchange Association to self-regulate.
The rules for insider trading in stocks and bonds are quite clear. One of the characteristics of Japanese insider trading rules is that the “inside information” that would prohibit someone from insider dealing is specified. This includes knowledge of mergers, share swaps, company splits, transfers of shares, material damage caused by disaster, litigation, and/or changes in major shareholders.
A Japanese listed company is obliged under the FIEA to disclose to the public in a timely manner all such “inside information” that relates to it, and an inside person who becomes aware of any such information is prohibited from buying or selling the financial instruments before said information becomes public.
However, the situation is not so straightforward when it comes to digital assets, in large part due to the decentralized, pseudo-anonymous, or opaque ownership structures of certain issuers and firms in the space. A lack of identifiable issuers naturally makes it difficult to determine who qualifies as an “insider.”
This is why the FSA and SESC have seemingly settled on the need for digital asset-specific regulation, to plug this current hole in their insider trading regime.
The Nikkei Asia report claimed that the FSA is currently discussing the details of the new regulatory framework in a working group and should have the final proposal by the end of the year, with a goal of submitting amendments to the FIEA in the regular parliamentary session next year.
Reportedly, the plan is to first explicitly state that trading digital assets based on “undisclosed information,” such as knowledge of an exchange’s listing plans or major security vulnerabilities, is prohibited. With this addition to the FIEA, the FSA can then issue detailed guidelines that spell out what other conduct is subject to regulations.
Japan’s digital asset market has grown substantially in the past few years.
In September, blockchain analytics firm Chainalysis published its ‘global crypto adoption index’, which found that the Asia-Pacific (APAC) region was the fastest-growing region for on-chain crypto activity. In a follow-up report, the firm singled out Japan as having had the most significant shift in adoption amongst the APAC powerhouses.
“Among APAC’s top five markets, Japan saw the strongest growth,” said Chainalysis. “On-chain value received grew 120% in the 12 months to June 2025 relative to the 12 months prior, outpacing Indonesia (103%), South Korea (100%), India (99%), and Vietnam (55%).”
Chainalysis said this change in Japan was “fueled by regulatory shifts” that will “support market growth over time.” This includes recent regulatory reforms to better account for the role of digital assets as investment instruments, planned changes to the country’s tax regime to boost digital asset investment, and the licensing of the first yen-backed stablecoin.
The mooted changes to the FIEA and insider trading rules are likely to further this trend, with Wednesday’s report suggesting that the regulator believes fairer trading conditions will enhance the appeal of digital assets as investment products.
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Source: https://coingeek.com/japan-plans-2026-crackdown-on-crypto-insider-deals/
