Japan is moving forward with plans to implement regulations designed to prevent the exploitation of private information in cryptocurrency transactions.
The forthcoming regulations are expected to mirror the prohibitions against insider trading that exist in traditional stock markets.
A recent report from Nikkei Asia, published on October 14th, indicates that the Securities and Exchange Surveillance Commission (SESC) will be empowered to investigate potentially problematic cryptocurrency trading activities.
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Individuals found guilty of securing unfair gains through privileged information could be subject to financial penalties proportionate to the profits obtained. In instances of severe misconduct, the SESC would possess the authority to recommend criminal charges.
Currently, the crypto sector remains outside the scope of Japan’s primary financial legislation, the Financial Instruments and Exchange Act (FIEA), when it comes to regulating insider activity.
Furthermore, the Japan Virtual and Crypto Assets Exchange Association, the self-regulatory body for cryptocurrency exchanges, does not have mechanisms in place to identify suspicious trading patterns.
These shortcomings have made it challenging to effectively monitor and address potential wrongdoing, necessitating government intervention.
To remedy this situation, the Financial Services Agency (FSA), which oversees the SESC, intends to deliberate on the specifics of the proposed regulations via a dedicated working group. The overarching goal is to draft an amendment to the FIEA by the close of 2025, which will subsequently be presented for legislative approval.
In other news, the UK’s Financial Conduct Authority (FCA) recently reversed its ban on cryptocurrency exchange-traded notes (ETNs). Curious about what David Geale had to say? Read the full story.