Japan Creates Equal Opportunities in Crypto with Regulations Similar to Stock Market Rules

Japan’s Financial Services Agency (FSA) is preparing to implement comprehensive regulations that would prohibit insider trading within the cryptocurrency industry, signaling a major change in the governance of digital assets. Planned revisions to the Financial Instruments and Exchange Act (FIEA) would place cryptocurrencies under the same legal standards as conventional securities, effectively closing a loophole that has permitted unfair trading, according to an

. This proposal, which is anticipated to reach parliament in 2026, would give the Securities and Exchange Surveillance Commission (SESC) broader powers to investigate and penalize trades based on confidential information, as detailed in a .

The initiative is a response to increasing concerns as Japan’s crypto sector expands. At present, insider trading laws do not extend to digital currencies, which are governed by the Payment Services Act—a regulation focused more on payments than on investment, the Invezz report explains. This has resulted in a “significant oversight gap,” especially as crypto usage accelerates. With 7.88 million active crypto users in Japan by mid-2025—about 6.3% of the population—regulatory bodies are under mounting pressure to maintain market integrity, according to a

. The FSA intends to clearly define prohibited actions, such as trading tokens based on knowledge of upcoming exchange listings or undisclosed vulnerabilities, the Invezz report further notes.

However, enforcing these rules presents distinct difficulties. Unlike traditional securities, many digital assets function within decentralized frameworks and lack identifiable issuers, making it harder to determine who qualifies as an “insider,” the Coingabbar report points out. Regulators recognize these complexities and are working to develop clear standards, including penalties linked to illegal gains and criminal charges for serious violations, according to a

. The SESC’s expanded mandate is designed to parallel its role in overseeing stock markets, though experts warn—per the CoinCentral analysis—that uncovering wrongdoing in decentralized systems will demand new strategies.

This regulatory initiative is part of Japan’s broader strategy to establish itself as a leader in digital finance. The FSA has already tightened licensing rules for exchanges and is working on a yen-backed stablecoin to lessen dependence on U.S. dollar-based alternatives, the Invezz report highlights. Political support is also growing: Sanae Takaichi, expected to become Japan’s next prime minister, has advocated for technological independence and blockchain progress while emphasizing investor safety, according to a

.

Industry stakeholders have varied opinions. While tougher regulations may curb market manipulation, some worry they could hinder innovation in a field defined by decentralization. Supporters, however, argue that these changes could draw institutional investors who are cautious about crypto’s instability and reputation risks, as mentioned in a

. “Cryptocurrencies should adhere to the same standards of fairness and openness as traditional financial products,” an FSA representative stated, according to the Coinpedia article.

The schedule for rolling out these changes is ambitious. The FSA aims to finalize operational specifics by the end of 2025 through a dedicated working group before presenting the FIEA amendments to parliament, the Invezz report states. If enacted, the new rules would be implemented in 2026, coinciding with the establishment of a new FSA Crypto Bureau focused on Web3 regulation, according to a

.

As Japan advances with these regulatory reforms, its strategy could set a precedent for global standards. With crypto adoption expected to reach 19.4 million users by the end of 2025, as projected by the Coinpedia article, the importance of a balanced approach—safeguarding investors while encouraging innovation—has never been greater.