Several employees of digital asset platforms unexpectedly found themselves the focus of insider trading actions brought by the Department of Justice (DOJ) and the Securities and Exchange Commission (SEC) earlier this summer. While some would say digital assets fall outside the government’s jurisdiction, the government actions highlight the pressing need for digital asset businesses to create robust policies and procedures to prevent prohibited trading activity on their platforms, systems, and interfaces.

Given the government’s enhanced scrutiny of digital assets, businesses and providers must be extra vigilant to ensure that their internal policies, procedures, training, and monitoring are sufficient to cover cryptocurrency and better train staff and monitor employee trading activity.

Historically, insider trading violations in the financial world were limited to traditional securities products, usually equities. With these recent actions, however, regulators have signaled their intent to address all manner of trading activity they believe violates traditional notions of fairness or perpetuates fraud, irrespective of the regulatory status of underlying assets, protocols, or transactional networks.

Representatives from both the DOJ and SEC have highlighted the commitment of both agencies to target prohibited activities even where those activities are accomplished using novel media, or concern assets, instruments, or markets not previously subject to enforcement action.

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