Japan Bans Cryptocurrency Insider Trading, Shifts Regulation to Financial Products Trading Act

Japan has passed legislation classifying cryptocurrencies as financial assets under the Financial Products Trading Act, shifting regulatory oversight from the Payment Services Act to a broader financial regulatory framework. The reforms prohibit market participants from trading based on non-public information, applying traditional insider trading restrictions to crypto markets. Cryptocurrency businesses now face enhanced compliance obligations aimed at strengthening market integrity and user protection. Penalties have been increased, with unregistered operators facing up to 10 years' imprisonment and fines of up to 10 million yen. The term 'crypto trading company' replaces 'crypto exchange' in official terminology, reflecting Japan's intent to integrate cryptocurrency regulation within existing financial frameworks.