Japan is poised to rewrite the rules of crypto oversight, moving to curb crypto insider trading as part of a broader push to bring digital markets into its regulatory orbit. The country’s Financial Services Agency plans to empower its market watchdog, the Securities and Exchange Surveillance Commission (SESC), to police illicit crypto trades. This significant shift could reshape global standards for market integrity.
The new framework is slated to be finalized this year and submitted to parliament by 2026. Once formalized, it would extend securities-style rules under the Financial Instruments and Exchange Act (FIEA) to digital assets for the first time. This means the SESC could investigate suspicious crypto trades and recommend surcharges or criminal referrals for transactions based on undisclosed information.
Policy observers say this move could accelerate global alignment on market integrity standards and create competitive convergence, compelling other jurisdictions to follow suit.
Cessiah Lopez, head of policy and research at Superteam UK, a talent layer for Solana, commented on Japan’s initiative: “Japan’s move could add pressure for a clearer federal framework for the U.S., which is known to approach insider trading in crypto on a case-by-case basis, based on security laws.”
Lopez told Decrypt, “Insider trading erodes the integrity of our international financial systems and contributes to the subversion of the crypto community’s belief in democratizing access to wealth. Any move that helps harmonize the protection against it on a global scale should be welcomed.”
On a practical level, however, the U.S. has treated decentralized finance (DeFi) actors in a “fairly inconsistent” manner, with “different enforcement scopes and policy-effecting timelines” that have led to regulatory fragmentation.
Japan’s move demonstrates a preference for legislative clarity over case-by-case improvisation, as it situates crypto insider-trading prohibitions within the FIEA and empowers the SESC with securities-style tools, according to John Park, head of Korea at Arbitrum Foundation.
“That creates gravitational pull,” Park told Decrypt. “Compliance teams that standardize around the Markets in Crypto-Assets Regulation (MiCA) in Europe will find Japan’s FIEA rulebook legible.”
Park believes operational norms for market integrity are hardening first in Brussels and Tokyo, while U.S. actors could soon adapt to those norms out of competitive necessity.
He added, “Japan’s legislative-first model aligns with the EU’s philosophy and sets a high bar for market integrity. But regional hubs are not copying each other line by line.”
The effect, Park explained, is a “de facto clarity bloc that institutions find legible, even if the local rulebooks are not identical.”
Codifying insider trading will depend largely on “how quickly major markets can align on outcomes,” said Sam Seo, chairman at the Kaia DLT Foundation.
Seo told Decrypt that while the U.S. will build its approach through enforcement and case law, and the EU would likely integrate insider trading regulations into its MiCA framework, Japan’s move “makes it politically straightforward for other jurisdictions to treat insider trading in tokens as a crime, not a grey area.”
Such clarity could benefit those who “focus on utility” and create “liability for those who trade on confidential information,” he added. “Integrity is now a baseline requirement.”
https://decrypt.co/344714/how-japans-crypto-insider-trading-ban-could-reshape-global-policy