Japan’s main financial watchdog is getting ready to take a big step toward cleaning up crypto trading. The Financial Services Agency (FSA) plans to introduce new laws to stop insider trading in the crypto market — and this time, penalties could include higher fines and even criminal charges.
According to a report from Nikkei, the new rules will be sent to parliament sometime next year. The goal is simple: to make crypto trading as fair and transparent as trading stocks or bonds.
Japan moves to ban crypto insider trading
Right now, Japan already has insider trading laws under the Financial Instruments and Exchange Act, but those laws only cover traditional assets like stocks and bonds. Cryptocurrencies, on the other hand, fall under the Payment Services Act — because they were originally seen as tools for payments, not investments.
But times have changed. Crypto is now a major investment market, and regulators want to make sure everyone plays by the same rules.
Under the new plan, the Securities and Exchange Surveillance Commission (SESC) will get the power to investigate crypto projects for insider trading. If they find any suspicious trades made using secret, non-public information, they can recommend fines or even criminal charges.
Stronger oversight for a fairer market
Until now, Japan mostly relied on crypto exchanges and the Japan Virtual and Crypto Assets Exchange Association to keep an eye on the market. But experts say those systems aren’t enough to catch insider trading or big market manipulation.
With the SESC stepping in, the hope is to create a fairer, more trustworthy trading environment. This could also make crypto look more like a legitimate investment option — not just a risky bet.
How the new rules will work
The new amendments will update the Financial Instruments and Exchange Act to include a direct ban on insider trading in the crypto market. The FSA will also issue clear guidelines on what counts as illegal trading behavior.
Once these changes take effect, crypto will officially be treated like traditional assets such as stocks and bonds. However, regulators will still have to figure out how to apply these rules to crypto, since some projects don’t have clear issuers or leadership structures — which makes identifying insider trades harder.
Japan also has less experience catching insider trading in crypto than in traditional finance, so creating practical rules will take time and testing.
Crypto’s growing popularity in Japan
Crypto trading in Japan has exploded. By August 2025, the country had about 7.88 million active crypto accounts — nearly four times more than five years ago. With more people investing, regulators see a clear need to strengthen protections and make the market safer for everyone.
The FSA is also considering another big change: reclassifying crypto assets as financial products under the Financial Instruments and Exchange Act. This move could reduce taxes on crypto profits to a flat 20%, compared to current rates that can go as high as 55%.
A broader shift in Japan’s crypto approach
This push fits into Japan’s larger plan to modernize how it handles digital assets. The FSA has even discussed dividing cryptocurrencies into two main categories — based on their purpose and level of decentralization — to better guide regulation and taxation.
In short, Japan is preparing to treat crypto just like any other serious financial market. With tougher laws, clearer rules, and a focus on fairness, the country aims to protect investors and bring more trust to the fast-changing world of digital assets.
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