Japan May Extend Insider Trading Rules to Cryptocurrencies as FSA and SESC Prepare Guidance

Published: 2025-10-15 | Updated: 2025-10-15 | By: COINOTAG

• Planned legal change: explicit ban on insider trading in crypto under an amended FIEA.

• Regulators (FSA and SESC) will gain investigatory powers and issue detailed guidelines covering listing information and undisclosed security flaws.

• Market context: Japan reports 7.88 million active crypto accounts as of August 2025, increasing scrutiny amid global regulatory developments.

Insider trading in crypto in Japan: regulators aim to ban trading on undisclosed crypto information via FIEA amendments by 2026 to strengthen oversight and investor confidence.

How will Japan address insider trading in crypto?

Insider trading in crypto in Japan will be tackled by amending the Financial Instruments and Exchange Act so that the Securities and Exchange Surveillance Commission (SESC) can investigate suspected crypto insider trading and recommend penalties. The Financial Services Agency (FSA) will issue implementing guidelines clarifying covered conduct.

When will the new insider trading rules for crypto take effect?

The FSA has begun consultations and aims for enactment in 2026. The initial step is to amend the FIEA to explicitly prohibit trading based on nonpublic crypto information. After the statutory change, the FSA intends to publish detailed rules that will identify covered events—such as advance knowledge of exchange listings or undisclosed technical vulnerabilities—and set enforcement expectations.

Regulators face unique challenges: some tokens lack identifiable issuers, complicating the definition of an “insider.” Japan’s approach will draw on international examples—including the European Union’s 2024 crypto asset regulatory framework and guidance from the International Organization of Securities Commissions (IOSCO)—while adapting to local market structure and enforcement capacity. Domestic industry oversight, currently provided in part by the Japan Virtual and Crypto Assets Exchange Association (JVCEA), is considered insufficient alone to police insider trading without statutory backing for investigators.

Will leadership changes influence the regulatory direction?

Political leadership is likely to affect implementation speed and regulatory tone. Analysts expect Sanae Takaichi—widely discussed as a potential prime minister—to support a stronger digital economy while maintaining Japan’s reputation for strict financial oversight. Such a stance could accelerate efforts to clarify token classifications and enforcement standards.

Elisenda Fabrega, General Counsel at tokenization firm Brickken, commented: “Takaichi’s rise could alter Japan’s approach to crypto regulation and significantly impact investor confidence in the digital asset market.”

Frequently Asked Questions

Will the insider trading laws cover all cryptocurrencies and tokens?

Not necessarily all tokens automatically; the FSA plans to define which token categories and events fall under the rule through guidance following FIEA amendments. Tokens with no identifiable issuer present enforcement challenges and may require bespoke regulatory treatment. Final scope will be set in implementing rules.

How will this affect retail crypto investors?

In plain terms: retail investors should see fairer markets and reduced risk of trading against nonpublic information once rules are in place. The measures aim to increase transparency and confidence, though routine trading practices and retail access to markets are not expected to be restricted.

Key Takeaways

• Legislative change planned: Japan will amend the FIEA to explicitly ban insider trading in crypto and empower the SESC to investigate.
• Implementation timeline: Consultations are underway with a target for enactment and accompanying FSA guidelines by 2026.
• Market impact: Clearer rules aim to boost investor confidence amid growing participation (7.88 million active accounts as of August 2025) and international regulatory trends.

Conclusion

Japan’s proposed crackdown on insider trading in crypto centers on amending existing securities law and issuing detailed FSA guidance to cover trading on undisclosed token listings and security flaws. By combining lessons from the EU and IOSCO with local experience, authorities aim to create clearer, enforceable standards that strengthen market integrity and investor protection. Stakeholders should monitor FSA consultations through 2025–2026 and prepare for revised compliance obligations.

Sources (plain text): Nikkei Asia; Financial Services Agency (FSA); Securities and Exchange Surveillance Commission (SESC); Japan Virtual and Crypto Assets Exchange Association (JVCEA); International Organization of Securities Commissions (IOSCO); public reporting on 2022 insider trading cases involving former Coinbase employees.