Keywords
Insider Trading, Material Nonpublic Information, Crypto, Investor Protection
Abstract
This Essay examines whether the traditional rationales for prohibiting insider trading, which were developed for securities markets that facilitate capital formation, translate meaningfully to the emerging regulatory landscape for crypto assets. It contrasts the U.S. duty-based regime, grounded in fraud and fiduciary or confidential relationships under Rule 10b-5, with the EU’s information-based approach under the Market Abuse Regulation, which links trading prohibitions to mandatory disclosure of inside information. The former has proven underinclusive—prompting prosecutors to rely on wire fraud in recent crypto cases such as Wahi and Chastain while the latter tends toward overinclusivity.
Turning to the newly emerging regimes (the GENIUS Act, the pending CLARITY Act, the proposed Senate amendments, and the EU's MiCAR), the Essay argues that legislators have largely transplanted existing insider trading rules without reexamining their underlying rationales. This misalignment is particularly acute for stablecoins, meme coins, utility tokens, and other crypto assets that neither raise capital nor promise future cash flows. For such assets, concepts central to traditional insider trading law, for instance fundamental value, the “reasonable investor,” discounted future cash flows, and materiality, lose much of their analytical grip.
The Essay’s core claim is that, for crypto assets that are not functional equivalents of securities, investor protection rather than efficient capital formation should supply the rationale for prohibiting insider trading. It further submits that legislators should focus on regulating exchanges in their role as gatekeepers, leaving the still-evolving taxonomy of crypto assets to supervisory agencies.
Recommended Citation
31 Fordham J. Corp. & Fin. L. 587 (2026).
Included in
Banking and Finance Law Commons, Consumer Protection Law Commons, Legislation Commons, Securities Law Commons