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 orbit.
The country’s Financial Services Agency plans to empower its market watchdog, the Securities and Exchange Surveillance Commission, to police illicit crypto trades, in a shift that could reshape global standards for market integrity.
The 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 to digital assets for the first time. This means the SESC could probe suspicious crypto trades and recommend surcharges or criminal referrals for transactions based on undisclosed information.
Policy observers say the shift could accelerate global alignment on market integrity standards and create competitive convergence that could compel other jurisdictions to follow.
Cessiah Lopez, head of policy and research at Superteam UK, a talent layer for Solana, said Japan’s move could “add pressure for a clearer federal framework,” for the U.S., which she said is “known to approach insider trading in crypto on a case-by-case basis,” based on security laws.
“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,” Lopez told Decrypt. “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 actors in a “fairly inconsistent” manner, with “different enforcement scopes, and policy-effecting timelines” that have led to regulatory fragmentation.
Japan’s move shows it is “choosing legislative clarity over case-by-case improvisation,” as it situates “crypto insider-trading prohibitions inside the FIEA and empowering the SESC with securities-style tools,” John Park, head of Korea at Arbitrum Foundation, told Decrypt.
“That creates gravitational pull,” Park said. “Compliance teams that standardize around MiCA in Europe will find Japan’s FIEA rulebook legible.”
Park said he sees “operational norms for market integrity” hardening “in Brussels and Tokyo first,” while U.S. actors could soon “adapt to those norms out of competitive necessity.”
Japan’s legislative-first model “aligns with the EU’s philosophy and sets a high bar for market integrity,” he said. “But regional hubs are not copying each other line by line.”
The effect, Park said, is a “de facto clarity bloc that institutions find legible, even if the local rulebooks are not identical.”
Codifying insider trading would rest on “how quickly major markets can align on outcomes,” Sam Seo, chairman at the Kaia DLT Foundation, told Decrypt.
While the U.S. will “build its approach through enforcement and case law” and the EU would likely “integrate this into its MiCA framework,” Seo said, as Japan’s move “makes it politically straightforward” for other jurisdictions “to treat insider trading in tokens as a crime, not a grey area.”
Such a degree of clarity could benefit those who “focus on utility” and create “liability for those who trade on confidential information,” he said. “Integrity is now a baseline requirement.”