Japan's securities regulator, the Securities and Exchange Surveillance Commission (SESC), is set to introduce regulations to ban and punish insider trading in cryptocurrencies, aligning it with the country's stock trading laws. According to Nikkei Asia, the SESC will be authorized to investigate suspicious trading activities and impose fines based on profits gained from insider trading, with criminal referrals for more serious cases.
Currently, no insider trading rules under the Financial Instruments and Exchange Act (FIEA) cover crypto, and the self-regulated Japan Virtual and Crypto Assets Exchange Association lacks a monitoring system for such activities. The Financial Services Agency (FSA), the SESC's parent organization, will discuss the regulatory framework through a working group by the end of 2025, aiming to submit a proposed FIEA amendment in 2026.
This regulatory push follows a fourfold increase in crypto users to 7.88 million over five years, about 6.3% of Japan's population. Japanese regulators have limited experience with crypto insider trading cases, partly due to the difficulty in identifying insiders for tokens without clear issuers.
In a related development, Sanae Takaichi, likely to become Japan's next prime minister, has expressed support for technological sovereignty and blockchain development, which could foster a more open stance toward crypto. The FSA had earlier sought to shift crypto regulation from the Payments Services Act to the FIEA to enhance investor protection and address issues like scams and unregistered operations.
