Your Employees Are Probably In The Crypto Markets. Here’s What To Do
Cryptocurrency has come a long way since the advent of Bitcoin. As of early 2025, CoinMarketCap, a leading market tracker, currently lists over 2.4 million cryptocurrencies being traded on 778 exchanges — emphasis on currently. And these numbers are anything but static — check back tomorrow, and they could be drastically different. That’s how mercurial the cryptocurrency market is.
Initial Coin Offerings (ICOs) have given way to more structured fundraising mechanisms like Security Token Offerings (STOs) and Decentralized Autonomous Organization (DAO) funding rounds, though the fundamental appeal of blockchain-based investment opportunities persists. These tools straddle the line between cryptocurrencies and securities, highlighting the ongoing challenge of defining and regulating them. While mainstream financial firms remain cautious, significant progress has been made in clarifying regulatory frameworks globally. Entities like the SEC and the European Commission have issued more comprehensive guidelines, but gray areas persist, urging investors and firms to proceed with care.
Despite the uncertainty, one fact remains clear: Crypto is here to stay. Bitcoin, now over 15 years old, has firmly entrenched itself as a digital asset class, and a growing number of employees are actively participating in these markets. Whether it’s Bitcoin, Ethereum, or an array of altcoins, these investments intersect with the financial interests of your workforce. This makes it critical for financial firms to formally address cryptocurrencies in their policies and adapt existing frameworks for employee trading, private investment, and outside business interests.
While this might seem complex, it doesn’t have to be. With the right approach, your firm can leverage existing compliance structures to incorporate the nuances of the crypto marketplace. The following are some straightforward strategies and actionable guidelines to help you navigate these changes confidently and proactively.
New And Emerging Crypto Regulations In The US
While regulations governing crypto have been around since the early 2010s, leading regulatory agencies such as the SEC and the Commodity Futures Trading Commission (CFTC) have recently ramped up enforcement actions and proposed additional rules.
This deliberate acceleration promises to bring much-needed clarity to an industry often described as the Wild West of finance. While progress has been incremental, the intent is clear: to establish guardrails that protect investors and foster innovation without stifling the potential of blockchain technology. Recent developments, including the push for comprehensive legislation like the Digital Asset Market Structure Act, signal the U.S. government’s acknowledgement that crypto is no passing fad — it’s an enduring and heavily influential financial ecosystem.
And yet, the slow but steady regulatory progress is a double-edged sword. On one hand, clearer rules are expected to reduce the uncertainty that has long plagued crypto markets, enabling businesses and institutional investors to enter the space with greater confidence. On the other hand, the piecemeal approach creates a patchwork of state and federal regulations, leaving gaps and overlaps that companies must navigate carefully. Nonetheless, these efforts mark a turning point, reflecting the government’s recognition that crypto, when properly regulated, has the potential to coexist with traditional financial systems and continue to drive economic growth globally.
Your Guide To Ensuring Crypto Trading Compliance in 2025
Without further ado, let’s get into the specifics of how your firm can maintain compliance with crypto regulations while allowing your employees to engage with the market as they wish. Keep in mind that this guidance may change — check back on this post in a year for updated recommendations.
Buying and Selling Cryptocurrency
As of 2025, monitoring cryptocurrency transactions has become more feasible, though challenges certainly remain. The U.S. and other governments have introduced incremental regulations aimed at bringing transparency and oversight to the crypto markets. With frameworks like enhanced anti-money laundering (AML) rules, know-your-customer (KYC) requirements, and expanded reporting obligations for brokers and exchanges, compliance tools are beginning to integrate cryptocurrency transaction monitoring into their capabilities. However, the decentralized nature of many crypto assets and platforms still presents hurdles.
While monitoring has improved, prohibiting or restricting cryptocurrency transactions remains complex. Policies and employee attestations are helpful, but they are not foolproof, particularly as employees may use anonymous wallets or decentralized exchanges (DEXs) that operate outside traditional oversight.
Rather than attempting to outright prohibit crypto trading, a more pragmatic approach is to permit cryptocurrency transactions while treating them similarly to other financial activities, such as personal trading, outside business activities, or stock investments. With clear guidelines and periodic employee disclosures, you can ensure compliance without stifling employees’ participation in this evolving market.
Buying and Selling Cryptocurrency Futures
By this point, cryptocurrency futures are a well-established part of the financial landscape, with major exchanges like the CME Group offering regulated Bitcoin and Ethereum futures. These products are subject to oversight by the CFTC, which has classified cryptocurrencies as commodities. This regulatory framework provides additional transparency and makes it easier for firms to integrate crypto futures into their existing compliance programs.
If your firm already requires traditional futures to be precleared and/or disclosed, it should extend the same requirement to cryptocurrency futures. The risks and regulatory obligations associated with these trades make preclearance and disclosure essential for maintaining compliance and avoiding conflicts of interest.
If your firm doesn’t currently require preclearance or disclosure for any futures trades, it’s time to reconsider. Cryptocurrency futures, like other derivatives, can present significant risks and conflicts, particularly when employee trades overlap with firm or client interests. There’s no compelling reason to exclude futures from preclearance if your firm already applies these rules to other securities.
Buying and Selling ETFs That Include Cryptocurrency
The approval of Bitcoin exchange-traded funds (ETFs) in early 2024 was a monumental step, allowing individuals to gain exposure to Bitcoin through their retirement accounts, such as 401(k)s. This move opened the door for a broader range of investors — those previously hesitant to engage with the complexities of cryptocurrency wallets or exchanges — to participate in the Bitcoin market through traditional financial instruments. The ETF approval was particularly significant because it integrated Bitcoin into mainstream investment portfolios, making it easier for both retail and institutional investors to trade and hold the asset.
Given the increasing prevalence of cryptocurrency ETFs, firms must adapt their compliance policies accordingly. If your firm already requires ETFs to be precleared, it should extend this requirement to ETFs with cryptocurrency exposure. These products, while offering diversified or simplified access to the crypto market, carry risks that firms need to monitor closely.
If your firm does not currently require preclearance for ETF trades, it’s time to implement this policy. Cryptocurrency ETFs often include volatile assets and may behave differently from traditional ETFs. Preclearing these trades ensures consistency in compliance processes, mitigates potential conflicts of interest, and aligns your firm’s policies with the evolving financial landscape.
Private Investments/Outside Business Activities With Exposure to Crypto
Most financial firms require disclosure and preclearance of private investments and outside business activities. This includes investments made through hedge funds, private equity, venture capital, or other similar vehicles. As cryptocurrencies and blockchain technology have become integral to many industries, it is critical to extend these policies to hedge fund investments and other private investments with exposure to crypto. All such activities should be disclosed and precleared to maintain compliance and mitigate conflicts of interest.
Following this principle, any owner, director, or employee of a company involved in the cryptocurrency market must disclose their participation. This includes involvement with exchanges, wallet providers, mining operations, blockchain infrastructure companies, or entities that issue or create cryptocurrencies. With the 2024 approval of Bitcoin ETFs and the integration of crypto into more traditional investment vehicles, such involvement is increasingly common and should be carefully reviewed.
Employees should be reminded that all private investments and outside business activities must be reviewed by your firm and kept up to date. Updates should occur whenever new investment activity takes place and as part of an annual review process to ensure ongoing compliance.
Bottom line: Private investments and outside business activities with exposure to crypto are generally approvable, provided there’s no conflict with the firm’s operations or policies. Clear guidelines and consistent reviews will help maintain transparency and protect both the firm and its employees.
Participation in Initial Coin Offerings
Initial Coin Offerings remain challenging to monitor due to the decentralized and, in many cases, unregulated nature of the platforms on which they occur. While ICOs have declined in popularity since their peak in the late 2010s, they still pose significant risks to firms and employees, particularly when the offerings lack transparency or operate in jurisdictions with weak regulatory oversight.
Regulatory thinking has progressed, and many jurisdictions now classify ICOs as securities, making them subject to securities laws. Firms should align their policies accordingly. If your firm prohibits participation in Initial Public Offerings (IPOs), it should also prohibit participation in ICOs to maintain consistency and mitigate potential risks.
For firms that do not classify ICOs as securities, employee participation should be treated as a private investment or outside business activity and require preclearance. This ensures the firm can assess the risks and address potential conflicts of interest before employees engage with these offerings.
Firms should also remain vigilant about newer fundraising methods like STOs, which often come with clearer regulatory frameworks but still carry risks that necessitate oversight.
Mining Cryptocurrency or Investing in a Company That Mines Cryptocurrency
Cryptocurrency mining remains a significant outside business activity and, as such, should be disclosed and precleared by your firm. While mining is less prominent than it was during the peak of Bitcoin’s price surge, it still represents a potential conflict of interest or regulatory risk for employees involved in this activity.
Employees should be reminded that certain types of mining or the creation/release of cryptocurrencies could expose them to insider trading risks, especially in the case of mining companies with access to non-public information.
Firms should also consider the growing regulatory focus on the environmental impact of mining operations. With increasing scrutiny over the energy consumption associated with crypto mining, firms may also want to evaluate how involvement in mining aligns with corporate social responsibility (CSR) policies or sustainability goals.
The Risk to Employees Engaged in Crypto Activity
Cryptocurrencies and crypto assets continue to experience significant volatility, with prices soaring and crashing at rapid rates. As a result, your employees could quickly find themselves facing financial distress, especially as the market remains unpredictable.
Although the market has matured somewhat since its inception, regulatory clarity is still evolving. Employees engaged in crypto activities may inadvertently risk violating insider trading or AML laws, especially as enforcement around these regulations becomes more stringent.
The relative novelty of cryptocurrencies and the lack of comprehensive regulations in some jurisdictions means risks remain high. These include potential fraud — whether through untrustworthy exchanges, scam projects, or unreliable products — as well as regulatory risks. While regulatory bodies are increasingly providing clearer guidelines, the laws around crypto markets are still in flux, and employees could find themselves inadvertently exposed to uncharted legal territory.
To navigate these risks effectively, firms must proactively manage their employees’ crypto-related activities, ensuring that adequate policies are in place to prevent violations and protect both individuals and the firm from financial and legal repercussions.
Insights from Star’s Crypto & Compliance Survey
In 2024, StarCompliance fielded its fourth annual Crypto and Compliance survey to take the temperature on employee crypto trading around the world. Throughout the past 4 years, the results remain a steadfast reminder that firms need to be diligent about the care and focus they take to educate employees and update their crypto compliance policies.
Some stand-out insights:
- When did your company implement a crypto-trading policy?
As of 2023, only one-third of firms (down from 43%) surveyed had implemented an employee crypto-trading policy, a decrease from the previous year. Of those that have a policy in place, a significant majority (58%) of firms have only implemented an employee crypto-trading policy within the past 12 months, highlighting the relatively recent prioritization of compliance in this evolving space. - How will your firm monitor and manage employee crypto risks?
According to the survey, there was a slight increase to 25% – up from 14% the previous year – of survey respondents that will be investing in crypto monitoring software to manage crypto risks. In addition, the majority of respondents (60% in 2024 vs 63% in 2023) are looking to monitor and manage employee crypto-trading risks by investing in or using compliance/monitoring software, with over one-third (35%) planning to use their current compliance software. In contrast, almost 20% – up from 16% of respondents stated they would not be monitoring crypto-trading activity for their employees, while others are awaiting more regulatory guidance before making decisions. Interestingly, the number of respondents rose to 8% in 2024 from 3% in 2023 that still rely on a manual processes, such as Excel, to track employee trades, an outdated approach that could pose significant risks as the volume and complexity of crypto transactions rise.
Final suggestions
A majority of firms surveyed by StarCompliance in 2024 (39%) anticipated that regulatory guidance — such as the SEC’s approach to the crypto industry in the U.S., MiCA in the EU, and other global frameworks — would increasingly influence business practices into 2025. Still, there remains much uncertainty about when comprehensive regulations will take effect and the consequences for noncompliance.
For the time being, your firm’s best bet is to future-proof your compliance systems. Here’s what we recommend:
- Review your firm’s employee trading, private investment, and outside business policies as they relate to cryptocurrencies and cryptosecurities. Assess how new regulatory developments (e.g., crypto asset regulations, Bitcoin ETFs, and crypto derivatives) might affect your firm’s existing policies.
- Update all current policies to include cryptocurrencies and cryptosecurities. Ensure policies reflect the latest regulatory guidelines, including recent SEC rulings and developments in crypto futures and ETFs. Address both employee participation and firm exposure to crypto markets.
- Describe the risks to employees and the firm regarding participation in crypto activities. Highlight potential legal risks, including insider trading, money laundering, and market manipulation, as well as financial risks related to crypto volatility and fraud.
- Clarify to employees that all crypto activities are covered by current firm policies. Specify that any crypto-related activity, including Bitcoin ETFs, mining, trading, and investments, must adhere to the same standards as traditional securities or private investments, and must be disclosed and precleared when required.
- Communicate crypto policies and guidance to all firm employees. Include crypto activities in your firm’s annual attestations. Make sure employees are educated on evolving crypto regulations and risks, including new reporting and compliance requirements. Update annual attestations to explicitly include crypto activities, with a focus on both compliance and ethical considerations.
- Monitor the regulatory landscape and update policies accordingly. Stay informed about new regulations and market trends, especially regarding crypto ETFs, tokenized assets, and emerging technologies like decentralized finance (DeFi) and NFTs. Revise policies proactively to stay ahead of regulatory changes.
To simplify crypto compliance, StarCompliance offers a comprehensive, automated solution for monitoring employee crypto-trading activity. With features like pre-trade clearance, post-trade monitoring, automated reconciliation, and real-time reporting, the STAR Platform offers seamless integration across global exchanges and blockchains. It also provides powerful tools for identifying compliance violations, tracking digital asset holdings, and ensuring ongoing employee attestations.
Want to stay ahead of evolving crypto regulations? Request a demo today to see how Star’s solution can streamline your compliance processes.
February 11 @ 10:00 AM EST | 3:00 PM GMT
Navigating Global Crypto Regulations
Globally, the regulatory landscape for cryptocurrency has been rapidly evolving, with countries taking diverse approaches to address its growing prominence.
