“Our framework aims to improve user protection while remaining keen to promote innovation, given that crypto assets are increasingly positioned as investment targets for domestic and foreign investors,” the FSA said in the statement.
The FSA said the government was implementing an insider trading ban for crypto that works just like the stock market. Company insiders or exchange employees are prohibited from buying or selling tokens if they have knowledge of unpublished “material facts.” This includes secrets like an exchange planning to add or remove a coin, a company going bankrupt, or large trades compounding.
The bill creates “strict rules for public disclosure of information” to prevent developers from lying to the public. Projects must publish clear details about how their technology works, their procurement and company finances. If a company raises capital via a token but chooses not to obtain an independent audit from an accounting firm, regular investors will face a strict investment cap of 2 million yen.
The government is also being much tougher on bad actors. The maximum prison sentence for anyone running an unregistered crypto business will increase from three years to 10 years. The country’s securities watchdog will also have clear powers to conduct criminal investigations and ask courts to freeze funds. Operating without registration could result in up to 10 years in prison, up from three, and fines could reach 10 million yen ($62,800).
