Japan Moves To Ban Insider Trading In Cryptocurrency Market

The Japanese government is preparing a new law that will make insider trading in cryptocurrency markets a criminal offence. The move is part of a wider effort to bring the digital asset industry under the same level of regulation as traditional stocks and securities.

Officials plan to amend the Financial Instruments and Exchange Act (FIEA) by 2026, with the Financial Services Agency (FSA) and the Securities and Exchange Surveillance Commission (SESC) coordinating the process.

Under the proposed law, it will be illegal to buy or sell cryptocurrencies using secret or undisclosed information. The SESC will also gain new powers to investigate suspicious trading and impose fines based on the profits earned from illegal activities.

In severe cases, offenders could face criminal prosecution. The structure will mirror Japan’s traditional financial market system, where penalties—known as surcharges—increase according to the amount of profit gained through unlawful trading.

Currently, cryptocurrency activities in Japan are guided by the Payment Services Act, which lacks clear rules against insider trading. This gap has allowed some insiders, including exchange workers and project developers, to take advantage of private details about token listings, system breaches, or major protocol changes before they become public.

The Japan Virtual and Crypto Assets Exchange Association (JVCEA), the country’s self-regulatory body, has struggled to address these gaps due to limited authority and enforcement power.

Through the planned update to the FIEA, the FSA aims to define insider trading in digital assets clearly and apply the same standard used in other financial markets. The draft of the law is expected to be completed by the end of 2025 and presented during the next legislative session.

Once approved, the law will give regulators authority to oversee exchanges, blockchain projects, and even decentralised platforms operating in Japan. Exchanges will also be required to install automated monitoring systems that can detect patterns linked to insider trading.

The new framework represents a significant shift in Japan’s approach to cryptocurrency oversight. Individuals or organisations caught engaging in insider trading in digital assets will face the same legal consequences as those involved in stock market manipulation.

Japan’s move signals a growing commitment to building transparency, accountability, and trust in its digital asset market—making it safer and more credible for investors at home and abroad.

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