Japan Regulators Could Move to Ban Insider Trading in Bitcoin and Other Cryptocurrencies

• Ban planned on insider trading for cryptocurrencies in Japan

• The SESC will be empowered to investigate suspected trades using undisclosed information and recommend surcharges or criminal referrals.

• Legislative work is expected with the Financial Services Agency targeting passage of new rules by 2026; past cases such as the 2022 U.S. Coinbase listing incidents demonstrate enforcement precedents.

Insider trading on crypto in Japan: regulators plan a ban and new enforcement powers, with legislation targeted for 2026 — read the latest COINOTAG update.

Published: 2025-10-14 | Updated: 2025-10-14 | Author: COINOTAG

What is the proposed ban on insider trading on crypto in Japan?

Insider trading on crypto in Japan refers to the planned legal prohibition on buying or selling digital assets based on undisclosed, material information. Japanese regulators propose new rules that explicitly cover cryptocurrencies and will give the Securities and Exchange Surveillance Commission (SESC) authority to investigate and refer cases for sanctions or criminal action.

How will Japanese authorities enforce insider trading rules for cryptocurrencies?

According to reporting by The Nikkei, the Financial Services Agency (FSA) will first clarify that using undisclosed information to trade cryptocurrencies is prohibited, then draft specific enforcement rules. The SESC is expected to be authorized to conduct investigations, recommend surcharges, and make criminal referrals when evidence shows trades were based on non-public information. These measures align regulatory scope for digital assets with securities frameworks already used for stocks and bonds.

Background and context

Japan has long been a major market for digital assets, with extensive retail participation and a regulatory history shaped by high-profile incidents. The 2014 Mt. Gox collapse in Tokyo and subsequent prolonged reimbursement process highlighted systemic risks in early crypto markets. More recently, the 2022 insider trading case in the United States involving advance notice of token listings on Coinbase illustrated how centralized exchange announcements can create material, tradable information — commonly called the “Coinbase effect.” Japanese regulators note these precedents while drafting rules tailored to domestic markets.

What existing gaps does the new rule address?

Until now, insider trading laws in Japan did not explicitly cover cryptoassets, leaving an enforcement gap when non-public information affected token prices. The proposed approach will (1) define prohibited conduct for crypto trading using undisclosed information, (2) extend investigatory powers to the SESC, and (3) create mechanisms for administrative or criminal action. The FSA’s initiative aims to reduce information asymmetry and strengthen trust in the crypto market.

Frequently Asked Questions

Will the new rules criminalize all crypto trades made with private information?

The proposed framework seeks to prohibit trades based on undisclosed, material information; not all trades by insiders will automatically be criminal. The SESC will investigate intent and evidence, and may recommend surcharges or criminal referrals depending on severity and proof of misuse of non-public information.

When will the ban on insider trading for crypto take effect?

Japanese authorities plan to draft detailed rules after initial policy decisions and aim to pass legislation by 2026. Interim clarifications and administrative guidance may appear sooner as the Financial Services Agency coordinates with the SESC and other stakeholders.

What this means for market participants

• Exchanges: Must review listing and information disclosure policies to reduce the risk of material non-public information being used for trading.
• Issuers and insiders: Should adopt robust internal controls and insider trading policies for tokens and related assets.
• Traders and investors: Can expect clearer enforcement standards and potentially lower information-driven volatility as rules are implemented.

Sources and expert context

This report is based on coverage by The Nikkei and on public descriptions of the roles of the Financial Services Agency and the Securities and Exchange Surveillance Commission. Historical context references the Mt. Gox collapse (2014) and the U.S. 2022 insider trading case involving advance token listing information on Coinbase. These cases provide precedent and illustrate enforcement challenges. No external links are provided; sources are cited here in plain text for transparency.

Key Takeaways

• Explicit prohibition: Japan will explicitly ban insider trading on cryptocurrencies to close a regulatory gap.
• New enforcement powers: The SESC will gain authority to investigate and recommend sanctions or criminal referrals.
• Timeline: The Financial Services Agency aims to draft and pass rules with a 2026 legislative target; market participants should prepare compliance measures now.

Conclusion

The planned ban on insider trading on crypto in Japan represents a significant step in aligning digital asset oversight with traditional securities enforcement. By empowering the SESC and tasking the Financial Services Agency to draft specific rules, regulators aim to reduce information-driven market abuses and enhance investor protection. Market participants — from exchanges to individual traders — should monitor guidance from Japanese authorities and strengthen compliance frameworks ahead of the expected 2026 legislation. COINOTAG will continue to report updates as official details are published.