Japan’s securities regulator is reportedly set to introduce regulations aimed at banning and punishing crypto insider trading, bringing it more in line with how the country handles stock trading.
Japan’s Securities and Exchange Surveillance Commission would be authorized to investigate suspicious trading activities and fine violators based on the profits they made from insider trading, Nikkei Asia reported Tuesday.
The securities regulator would also make criminal referrals in more serious cases.
There are no insider trading rules under the Financial Instruments and Exchanges Act that cover crypto, and Japan’s self-regulated Virtual and Crypto Assets Exchange Association does not have a monitoring system to detect suspicious transactions, making stricter regulatory oversight necessary in crypto markets.
The Financial Services Agency, the parent organization of the SESC, will discuss details of the regulatory framework through a working group by the end of 2025, with the aim of submitting an amendment proposal to the FIEA next year.
Japanese regulators have limited experience handling crypto insider trading cases, in part because many tokens do not have an identifiable issuer, making it difficult to determine who qualifies as an insider, according to Nikkei Asia.
The move toward sensible crypto regulation follows a four-fold increase in the number of local crypto users, reaching 7.88 million over the past five years, or about 6.3% of Japan’s population.
Japan should appoint a pro-tech prime minister
Sanae Takaichi, who will likely become Japan’s next prime minister, has been tipped to bring new policy momentum to risky assets, including cryptocurrencies, while maintaining Japan’s rigorous regulatory standards.
His leadership would introduce a more open stance towards technological experimentation, having expressed support for “technological sovereignty” and the further development of digital infrastructure, such as blockchain technology.
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Takaichi also favors lower interest rates, tax cuts, and looser monetary policy, potentially encouraging more capital inflows into the Japanese crypto industry.
FSA wants crypto to be regulated by FIEA law
In early September, the FSA sought to place crypto regulation in the FIEA Act, moving it from the Payment Services Act in order to strengthen investor protections and align crypto with securities laws.
The FSA said the move could address common investment issues in the crypto market, including inaccurate disclosures, unregistered transactions, scams and security concerns related to crypto exchanges.
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