Japan Plans New Regulatory Framework to Ban Crypto Insider Trading

Jan 1, 2026

1 min read

Japan Plans New Regulatory Framework to Ban Crypto Insider Trading — Unsplash - mako

Japan's financial authorities are preparing to introduce new regulations to prohibit and penalise insider trading in cryptocurrencies. The Securities and Exchange Surveillance Commission (SESC) will gain the power to investigate suspicious transactions, impose surcharges based on illicit profits, and make criminal referrals in serious cases.

Crypto assets currently fall outside the scope of insider trading rules under the Financial Instruments and Exchange Act (FIEA), and the self-regulatory Japan Virtual and Crypto Assets Exchange Association (JVCEA) lacks a monitoring system capable of detecting suspicious trades. The Financial Services Agency (FSA) plans to finalise the regulatory framework through a working group by year-end, with a proposed FIEA amendment to be submitted during the next regular parliamentary session. Under the planned framework, regulators will first explicitly prohibit trading based on non-public information, then issue detailed guidelines specifying which conduct falls under the ban — including trades based on advance knowledge of exchange listings or undisclosed security vulnerabilities. A key challenge lies in defining who qualifies as an insider, given that many tokens lack an identifiable issuer. The number of active crypto users in Japan has quadrupled over the past five years to 7.88 million, representing approximately 6.3% of the population, while on-chain transaction value grew 120% year-on-year as of June 2025.

Sanae Takaichi, widely expected to become Japan's next prime minister, has expressed support for technological sovereignty and blockchain infrastructure development, signalling a pro-innovation stance alongside the maintenance of rigorous regulatory standards. If enacted in 2026, Japan would join the European Union and South Korea among jurisdictions that have introduced specific rules targeting crypto insider trading.

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