Japanese Regulator Eyes Ban on Crypto Insider Trading: Nikkei

Japanese regulators plan to ban insider trading on crypto, according to a report, in a first for the Asian country which had some of the earliest exposure to digital assets.

The country’s top financial watchdog, the Securities and Exchange Surveillance Commission, will soon be authorized to investigate suspected violations, issuing surcharge recommendations or criminal referrals in the case of trades based on undisclosed information, Japanese financial publication The Nikkei reported Tuesday.

Insider trading did not previously apply to digital assets, the paper reported. The parent organization of the SESC, the Financial Services Agency, will discuss the details of the new regulations with the objective of passing new laws in 2026.

The Nikkei reported that regulators will first explicitly state that trading cryptocurrencies based on undisclosed information is prohibited, and then draft more specific rules.

Insider trading is the act of using non-public information to buy or sell an asset. Traders with such knowledge can go on to make gains using the information. 

The first insider crypto trading case took place in the U.S. in 2022 when former Coinbase product manager Ishan Wahi provided information regarding upcoming token listings on the exchange to his brother Nikhil Wahi, and his friend, Sameer Ramani.

Nikhil Wahi and Ramani were then able to buy the tokens before Coinbase announced their listings, and then sell them quickly for profit. Cryptocurrencies often rise in price once announced for listing on the prominent exchange, in a trend called the “Coinbase effect.”

Japan has long been a crypto hub; former major Bitcoin exchange Mt. Gox was based in Tokyo, leading to a large retail market in the country. But an infamous, long-running hack of the platform led to its 2014 closure, with reimbursements only beginning last year.