“Our framework intends to improve user protection while being mindful of promoting innovation, given that cryptoassets are increasingly positioned as investment targets for both domestic and foreign investors,” the FSA said in the statement.
The FSA said the government is implementing a ban on insider trading for crypto that works exactly like the stock market. Company insiders or exchange workers are prohibited from buying or selling tokens if they know of undisclosed “material facts”. This includes secrets like an exchange planning to add or drop a coin, a company going bankrupt, or large trades that make it up.
The bill creates strict “information disclosure rules” to prevent developers from lying to the public. Projects must publish clear details about how their technology works, their tenders and their business finances. If a company raises capital through a token but chooses not to get an independent audit from an accounting firm, ordinary investors will face a strict investment cap of ¥2 million.
The government is also getting much tougher on bad actors. The maximum prison sentence for anyone running an unregistered crypto business will jump from three years to 10 years. The country’s securities watchdog will also be given clear powers to conduct criminal investigations and ask courts to freeze funds. Operating without registration can result in up to 10 years in prison, up from three, and fines can rise to 10 million yen ($62,800).
