Japan Cabinet Approves FIEA Bill Bringing Insider-Trading and Disclosure Rules to Crypto

Japan’s cabinet has approved draft legislation that would apply elements of the Financial Instruments and Exchange Act to crypto-asset trading, introducing explicit insider-trading restrictions, disclosure obligations for issuers, and stronger penalties for unlicensed operators, according to materials published by the Financial Services Agency.

The amendments would not replace Japan’s existing crypto framework under the Payment Services Act but would introduce additional securities-style rules governing market conduct and disclosures.

Cabinet Approves Draft FIEA Amendment With Earliest Start in FY2027

The amendment was approved by the cabinet this week and submitted to parliament by the Financial Services Agency (FSA). Rather than transferring the entire crypto framework out of the Payment Services Act (PSA), the bill adds FIEA-style market conduct and disclosure rules around crypto trading, applying securities-style market-conduct and disclosure rules to selected crypto-asset activities while leaving payment-related regulation under the Payment Services Act in place, with parts of the existing PSA framework remaining in place.

Finance Minister Satsuki Katayama addressed the change at a press conference after the cabinet meeting.

«In response to changes in financial and capital markets, we will expand the supply of growth capital while ensuring market fairness, transparency, and investor protection,» Katayama said.

If passed in the current parliamentary session, the law would take effect as early as fiscal year 2027 if passed during the current Diet session.

FIEA Amendment Introduces Insider-Trading Ban and 10-Year Prison Terms

The amendment would introduce an explicit insider-trading prohibition for crypto assets, which FSA materials say is intended to close gaps in existing unfair-trading coverage for crypto. FSA materials have noted that crypto is already covered by general unfair-trading provisions but lacks a direct insider-trading rule, and the amendment is designed to close that gap. Issuers will also face annual disclosure requirements under the new framework.

Penalties for unlicensed operators selling crypto assets rise sharply. Maximum prison terms for certain categories of unlicensed crypto-asset sales allow courts to invalidate transactions with unregistered operators, improving investors’ ability to seek refunds and giving investors a clearer path to seek refunds from unlicensed platforms.

Registered firms will be renamed from «crypto asset exchange operators» to «crypto asset trading operators,» reflecting the shift toward treating certain crypto-asset trading activities more similarly to investment-product markets under the FIEA framework rather than purely payments regulation.

SESC Gains Expanded Powers Over Crypto Market Conduct

The bill also expands the role of the Securities and Exchange Surveillance Commission (SESC) in policing crypto-market misconduct. FSA materials have indicated that the reform is intended to bring crypto unfair-trading oversight closer to how the SESC handles traditional securities markets, including criminal-investigation tools and surcharge mechanisms more closely aligned with those used in securities-market enforcement for crypto cases under the PSA regime.

That shift would give Japanese authorities a more direct enforcement toolkit for market manipulation, insider dealing, and unregistered issuance, aligning aspects of crypto-market conduct supervision with enforcement approaches used in traditional securities markets and other financial products.

FSA Ties the Bill to Crypto’s Shift From Payments to Investment

The FSA signalled a move toward FIEA-style rules for crypto in late 2025, citing increased use of digital assets for investment purposes rather than payments in policy statements released in late 2025. This week’s cabinet approval formalises that earlier policy direction into draft legislation.

Japan now has more than 13 million crypto accounts, and the FSA receives more than 350 fraud-related complaints per month on average, according to a Baker McKenzie report published earlier this year. Those figures were cited in a Baker McKenzie report discussing the regulatory backdrop to the proposed amendments of the FIEA bill as part of the regulatory context cited alongside the proposed amendments.