“Our framework aims to enhance user protection while remaining mindful of promoting innovation, as 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 an insider trading ban for cryptocurrencies that works exactly like the stock market. Company employees or exchange workers are prohibited from buying or selling tokens if they know unpublished “material facts.” This includes secrets like an exchange planning to add or drop a coin, a company closing, or large transactions coming together.
The bill creates strict “public information disclosure rules” to prevent developers from lying to the public. Projects must publish clear details about how their technology works, their supply and their commercial finances. If a company raises capital through a token but decides not to obtain an independent audit from an accounting firm, regular investors will face a strict investment limit of 2 million yen.
The government is also getting 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 get clear powers to conduct criminal investigations and ask courts to freeze funds. Operating without registration could lead to up to 10 years in prison, instead of three, and fines could increase to 10 million yen ($62,800).
