StarCompliance maps insider trading rules to digital markets

StarCompliance says long-standing insider trading theories already reach digital assets, tokenized securities and prediction markets, so compliance teams should broaden policies instead of waiting for new rules. The company’s new article lays out four theories and argues that restricted lists alone no longer cover interconnected markets.

Why it matters: - Compliance teams are being asked to manage insider-trading risk across digital assets, tokenized securities, and prediction markets. - StarCompliance argues regulators do not need to rewrite core insider trading law for these markets. - Firms need policies that track how information and economic exposure move across venues, not just traditional securities.

What happened: - StarCompliance released a new article, “Four Insider Trading Theories Every Compliance Team Should Understand for Digital Markets.” - The article addresses how established insider trading law applies to digital assets, tokenized securities, and prediction markets. - The piece says the key legal questions remain the same across public equities, cryptocurrencies, tokenized securities, and prediction market contracts.

The details: - The article centers on three recurring tests: whether material nonpublic information was involved, whether a duty of trust or confidence existed, and whether someone used the information for personal financial gain. - Classical theory remains the base case for insider trading. It applies to directors, executives, employees, and others with fiduciary duties to shareholders. - StarCompliance says tokenizing a security does not change that obligation. - The company recommends employee trading policies that are broad enough to cover new instruments. - Misappropriation theory can reach outsiders who receive confidential information through a relationship of trust. - Examples include investment bankers, consultants, lawyers, and technology vendors. - StarCompliance says prediction markets make this theory more relevant because contracts can track regulatory decisions, mergers, and other events. - Shadow trading gained attention through SEC v. Panuwat. - Under that theory, liability may attach to an economically related asset, not only the security directly tied to the confidential information. - StarCompliance says that matters in digital markets because Layer 1 and Layer 2 protocols and tokenized real-world assets can move on the same events. - Conduct risk is a growing issue in prediction markets. - Compliance teams must consider whether a trader could influence the event outcome and profit from confidential business information outside traditional securities markets. - Exchanges are strengthening surveillance and market integrity controls as regulatory scrutiny increases. - The article says traditional restricted lists were built for individual securities and are not enough for interconnected markets. - StarCompliance recommends expanding employee trading policies beyond brokerage accounts to include digital asset exchanges, prediction market platforms, and other venues where MNPI could be monetized. - The company’s full article is available on the StarCompliance blog.

Between the lines: - The message is less about new law and more about new market plumbing. - StarCompliance is framing digital markets as another setting where old legal theories can be applied to new instruments. - That suggests compliance teams may need broader surveillance, better asset mapping, and faster policy updates. - The company positions its Connected Compliance approach as a way to put employee trading, digital assets, prediction markets, surveillance, and analytics on one platform. - StarCompliance says that integration can help firms spot risks sooner and respond with more confidence.

What's next: - Compliance leaders are expected to review employee trading policies for digital markets. - StarCompliance says the full article includes real-world prediction market scenarios to help teams prepare. - Firms will likely keep expanding controls as regulatory attention on prediction markets and tokenized assets grows.

The bottom line: - StarCompliance’s core argument is simple: digital markets do not require a new insider-trading playbook, but they do require a much wider one.