Japan sets out to ban insider trading in crypto: Nikkei

Japan's financial authorities are preparing to crack down on cryptocurrency insider trading, according to Nikkei Asia.

Nikkei reported Wednesday that the Financial Services Agency plans to file amendments that would explicitly prohibit trading based on non-public information, with violators facing financial penalties proportional to their illicit gains. The amendments would allow the Securities and Exchange Surveillance Commission to have authority to investigate suspected cases and recommend either surcharges or criminal referrals.

The FSA intends to finalize regulatory details by year-end, targeting parliamentary submission in next year's regular session, according to Nikkei.

Currently, Japan's Financial Instruments and Exchange Act doesn't cover cryptocurrencies when it comes to insider trading, leaving oversight largely to self-regulation by crypto firms and industry associations. 

However, defining actionable insider information for crypto presents unique challenges. Unlike traditional securities, many tokens lack identifiable issuers, complicating determinations of who qualifies as an "insider," according to the report. 

The country's regulators have increased oversight of the local crypto sector due to its growing convergence with traditional finance. Last week, Binance Japan announced that it has formed a capital and business alliance with payment giant PayPay Corporation, with PayPay acquiring a 40% equity stake in the local crypto exchange.