Inside Japan’s Plan To Take Down Insider Trading: Is This The End of Crypto Manipulation?

Core Points - Japan's top financial watchdog is set to implement new rules to ban insider trading in cryptocurrencies, granting the Securities and Exchange Surveillance Commission (SESC) the authority to investigate suspicious trades and recommend penalties or criminal charges based on undisclosed information [1][2] Regulatory Framework - Current insider trading laws in Japan do not cover crypto assets, which are regulated under the Financial Instruments and Exchange Act (FIEA) [2] - The Financial Services Agency (FSA) plans to finalize the new regulatory framework by the end of this year and submit amendments to the FIEA in the next parliamentary session [2] Oversight and Transparency - Japan has previously relied on self-regulation by crypto exchanges and the Japan Virtual and Crypto Assets Exchange Association (JVCEA), but this has proven insufficient for tracking trading activities [3] - The SESC's oversight aims to create a more transparent and fair trading environment, enhancing the attractiveness of crypto investments in Japan [3] Definition of Insider Trading - The initial step involves clearly stating that trading crypto based on non-public information is illegal, with the FSA expected to issue guidelines on specific behaviors to be covered [4] - Potentially banned activities include trading based on knowledge of upcoming exchange listings or undisclosed security flaws [4] Market Growth - Japan's crypto market is experiencing significant growth, with 7.88 million active crypto accounts in August 2025, representing a fourfold increase over the past five years [6] - The regulatory approach is shifting from treating crypto as a payment tool under the Payment Services Act to a focus on investor protection and market transparency under the FIEA [6] Global Context - Insider trading and fraud in the global crypto market are on the rise, prompting calls for stronger regulations from organizations like the International Organization of Securities Commissions (IOSCO) [7]