Japan Moves to Ban Crypto Insider Trading Under Proposed Securities-Style Rules

Japan's Financial Services Agency and Securities and Exchange Surveillance Commission are spearheading regulatory changes that would criminalize cryptocurrency insider trading, treating digital assets akin to traditional securities. The proposed framework, slated for parliamentary review in 2026, would impose fines or criminal charges based on offense severity while granting regulators investigative authority.

The initiative follows explosive growth in Japan's crypto sector, which now boasts over 7.8 million active trading accounts—a fourfold increase since 2020. Regulators aim to align digital asset oversight with existing securities laws, emphasizing investor protection and market transparency.

A working group will convene by year-end to define prohibited practices, potentially including front-running exchange listings or exploiting undisclosed vulnerabilities. Crypto exchanges must implement compliance programs and transparent trading protocols under the new regime.