Japan to ban insider trading in cryptocurrencies under securities law

Key points:

• Japan will include cryptocurrencies in the Financial Instruments and Exchange Act (FIEA), equating them with securities.
• The Securities and Exchange Commission will be given the power to investigate illegal transactions involving digital assets.

Japan is preparing a law prohibiting insider trading in cryptocurrencies under the Financial Instruments and Exchange Act (FIEA). The amendments will equate crypto assets with securities and grant regulators the authority to investigate cases involving the use of undisclosed information for trading purposes.

According to analysts, this move makes Japan the first major economy to extend market integrity rules to crypto assets. The innovation could alter the approach to regulating digital markets worldwide.

New powers and implementation deadlines

The Financial Services Agency (FSA) plans to grant the Securities and Exchange Surveillance Commission (SESC) the right to monitor illegal crypto transactions. The legislative framework will be finalized this year, and the bill is scheduled to be reviewed by parliament in 2026.

Once the amendments come into force, the commission will be able to investigate suspicious token transactions, refer cases to the prosecutor’s office, and introduce additional measures against manipulation. This will be the first time that digital assets will receive the same level of oversight as traditional securities.

Global impact

Experts believe that Japan’s initiative could prompt other countries to develop uniform rules for regulating the cryptocurrency market.

Cessiah Lopez, the head of policy and research at Superteam UK, said Japan’s actions would put pressure on the United States, where cases of insider trading in cryptocurrencies are dealt with separately under securities legislation.

According to her, the American system remains fragmented and inconsistent, while the Japanese model, with its clear legislative regulation, creates a basis for future harmonization of rules.

In September, the Japanese Financial Services Agency (FSA) proposed extending the Financial Instruments and Exchange Act (FIEA) to cryptocurrencies. The initiative aims to combat fraud, increase transparency, and strengthen control over brokers.

The regulator notes that the industry suffers from poor disclosure and the vulnerability of exchanges. The new measures will allow cryptocurrencies to be treated as financial instruments, introduce judicial protection mechanisms, and strengthen investor confidence.