Japan’s securities regulator is preparing for new regulations aimed at curbing crypto insider trading, aligning its approach with traditional stock market practices. The Securities and Exchange Surveillance Commission (SESC) will be empowered to investigate suspicious trading activity, impose fines on violators based on their profits from such activities, and even make criminal referrals in more severe cases. This move is necessary due to the lack of established insider trading rules under existing financial laws and the absence of a monitoring system for suspicious trading practices within the self-regulated Japan Virtual and Crypto Assets Exchange Association (JVCA). Japan’s regulators are particularly challenged by the decentralized nature of crypto, making it difficult to identify those who should be considered insiders. The Financial Services Agency (FSA), SESC’s parent organization, plans to finalize a regulatory framework through a working group by 2025, with an aim to submit a proposed amendment to the Financial Instruments and Exchange Act (FIEA) next year. Japan is witnessing a surge in crypto users, rising from 7.88 million over five years, indicating growing interest and adoption of cryptocurrency within its population. The country’s potential new Prime Minister, Sanae Takaichi, who is poised to take office, plans to adopt a more tech-focused approach towards regulatory oversight while maintaining Japan’s stringent standards. Her leadership is expected to foster an environment for technological innovation in the crypto industry. Takaichi advocates for policies that promote investment in technology, like blockchain development, and may lead to lower interest rates, tax cuts, and looser monetary policy measures, potentially attracting greater capital inflow into Japan’s cryptocurrency landscape. The FSA aims to bring crypto regulation under the FIEA Act, shifting it from the Payments Services Act, to enhance investor protection and align with securities laws. This move could help address common challenges in the crypto market like inaccurate disclosures, unregistered operations, scams, and security concerns related to exchanges.