Japan Moves to Ban Crypto Insider Trading with New Regulatory Framework

Japan's Financial Services Agency is taking decisive steps to curb insider trading in cryptocurrency markets. The Securities and Exchange Surveillance Commission will gain authority to investigate suspicious trades and recommend penalties, marking a significant shift from the current self-regulatory approach.

The proposed amendments to the Financial Instruments and Exchange Act WOULD close a critical loophole—while traditional securities have long been covered by insider trading laws, digital assets have operated in a regulatory gray area. This change comes as trading volumes on Japanese exchanges continue to grow, with platforms like bitFlyer and Liquid handling increasing institutional flows.

Market participants have anticipated such measures since the 2022 collapse of FTX exposed vulnerabilities in global crypto oversight. The new framework could set a precedent for other Asian financial hubs grappling with similar challenges in digital asset regulation.