Japan to Ban Crypto Insider Trading in Regulatory Overhaul

Japan's Financial Services Agency is set to implement the country's first prohibition on cryptocurrency insider trading, marking a significant shift in digital asset oversight. The move grants the Securities and Exchange Surveillance Commission new authority to investigate suspicious transactions and pursue criminal penalties under an expanded Financial Instruments and Exchange Act framework.

Market integrity concerns have driven the reform, with regulators dissatisfied by the current self-regulatory system overseen by crypto exchanges. The changes, expected to be finalized by year-end through a working group, will likely influence global standards as other jurisdictions grapple with similar market transparency challenges.

The legislative amendments, scheduled for parliamentary consideration in 2026, represent Japan's most substantial crypto market intervention since establishing its licensing regime for exchanges. The SESC's new powers include imposing financial penalties and referring cases for prosecution when traders exploit non-public information.