Regulators Focus on Selective Cryptocurrency Trading to Maintain Standards of Fair Disclosure

According to a Wall Street Journal article, the U.S. Securities and Exchange Commission (SEC) and the Financial Industry Regulatory Authority (FINRA) are ramping up their examination of irregular trading activity that occurs before significant crypto-treasury announcements. The agencies are looking into possible breaches of Regulation Fair Disclosure (Reg FD), which mandates that companies share important information with the public at large rather than select investors. This increased attention comes after reports of questionable trading patterns prior to official market updates, fueling worries about insider trading or potential market manipulation.

FINRA, which supervises broker-dealer operations, has already contacted multiple crypto treasury firms as part of its ongoing assessment. Such outreach is often an early step before launching formal probes, especially if there are signs that Reg FD may have been violated. This heightened scrutiny points to regulators’ growing interest in the overlap between conventional financial products and digital assets, particularly as crypto treasuries—financial instruments that mirror cryptocurrency portfolio performance—are becoming more popular among both institutional and individual investors.

The probe is focused on whether companies or individuals took advantage of confidential information to trade ahead of public announcements. For instance, if a crypto treasury firm revealed a new partnership or product after a period of unusual trading activity, authorities would investigate whether this breached Reg FD. The Wall Street Journal emphasized that FINRA’s participation highlights its responsibility in safeguarding market fairness, especially in rapidly evolving sectors like crypto where disclosure standards are still developing.

The SEC has also indicated a broader initiative to clarify crypto asset regulations in its Spring 2025 agenda. While this agenda mainly addresses rules for offering, holding, and trading crypto assets, it also signals the commission’s intent to close regulatory gaps. This suggests that the current focus on pre-announcement trading in crypto treasuries may be part of a wider effort to align crypto market conduct with existing securities regulations.

Experts point out that the results of these inquiries could set new standards for how crypto companies share significant information. If regulators determine that a firm failed to make timely and fair disclosures, it could face penalties ranging from fines to limitations on its products. Such measures would underscore the necessity of openness in a market where unequal access to information remains a persistent concern.

The Wall Street Journal article also discusses the wider impact for those involved in the market. Both traders and investors need to pay close attention to when and how information is released, especially for crypto treasuries, which often depend on fast-changing, real-time data. FINRA’s investigation may also encourage companies to strengthen their internal compliance systems, ensuring that all important information is released through authorized channels before any trading takes place.

As the crypto industry evolves, clear rules around disclosure and trading will be essential for building trust among investors. The actions taken by the SEC and FINRA show a proactive approach to managing risks in a sector where innovation frequently moves faster than regulation. Although the investigation is still in its early phases, its outcomes could influence how crypto treasuries and other digital assets are structured and reported going forward.