What legal challenges do DATs face regarding insider trading regulations?

Shane Molidor Explores How DATs Introduce Crypto’s Insider Trading Issues to Traditional Finance

Introduction: From Crypto Market Microstructure to Wall Street

As tokenization seeps into traditional finance (TradFi), new primitives are emerging that blur the line between information, access, and tradable rights. Industry executive Shane Molidor has spotlighted “DATs”-commonly framed as Data Access Tokens-as a flashpoint where crypto’s information asymmetry and insider trading challenges could migrate into regulated markets. If tokens gate early research, order-flow signals, or corporate disclosures, they may recreate the very problems regulators have long sought to contain in securities markets.

What Are DATs and Why Do They Matter?

DATs are tokenized entitlements tied to access-think premium data feeds, research, private forums, or early looks at market-moving indicators. In crypto, similar “access tokens” have unlocked gated analytics, trading signals, or protocol telemetry. The concern is straightforward: when access itself is tokenized and tradable, the token price can directly reflect the value of material, potentially nonpublic information (MNPI). Bringing that construct to TradFi introduces legal and market-structure risks that go well beyond crypto’s norms.

Key characteristics of DATs

• On-chain, tradable rights to gated information or services
• Programmable access windows, tiers, and revocation mechanics
• Potential to confer economic advantage tied to time-sensitive data
• Secondary market pricing that can imply the value of privileged signals

How DATs Echo Crypto’s Insider Trading Problems

Crypto has grappled with versions of insider trading for years: opaque token allocations, exchange listing leaks, unannounced unlocks, and MEV-driven information extraction. DATs may port these dynamics into environments governed by securities law, Reg FD, and stricter market surveillance.

Three rhymes between crypto and DAT-driven TradFi

1. Selective disclosure at scale: If a DAT gates early access to earnings materials, ratings changes, or issuer guidance, it risks selective disclosure akin to a pay-to-play MNPI channel. That collides with Reg FD for public companies.
2. MEV-style information extraction: Even without MNPI, time-priority access to high-value data (macro releases, order-flow analytics) enables advantaged trading. DATs could concentrate that edge and make it tradable.
3. Token-driven incentives: Projects may be tempted to inflate DAT value by promising “alpha” access. The economic incentive to blur the border between public information and MNPI is strong when token price depends on perceived edge.

Legal and Compliance Lens: Where DATs Can Cross the Line

As of 2025, the legal framework is clear on principles if not on token-specific guidance:

• Rule 10b-5: Prohibits trading on MNPI in breach of a duty of trust or confidence. If DATs distribute MNPI-or enable trading by those who receive it-liability risk rises.
• Reg FD: Public companies must disseminate material information broadly and simultaneously; token-gated early access would run counter to this rule.
• Howey/ securities analysis: If a DAT’s value depends on managerial efforts to source privileged alpha, it can resemble an investment contract, triggering registration or exemptions.
• Market abuse regimes (global): EU MAR and similar rules in the UK/Asia also police insider dealing and unlawful disclosure, regardless of token form.

Where DATs can be compliant

• Gating purely non-material, non-time-sensitive content (education, generic research)
• Public, simultaneous releases backed by on-chain attestations
• Structured “clean-room” analytics with hard controls to exclude MNPI

Designing DATs That Don’t Import Crypto’s Worst Habits

Shane Molidor’s core message is not anti-innovation; it’s a call to design DATs with TradFi-grade controls. The toolkit now exists to do this on-chain.

Technical controls

• Commit-reveal and frequent batch auctions to reduce timing advantages
• Threshold encryption or encrypted mempools (e.g., MEV-aware designs) to curb pre-trade leakage
• On-chain attestations and timestamps proving synchronized public releases
• Permissioned subnets or data rooms with auditable access logs

Policy and process controls

• Reg FD-aligned disclosure policies and public webcasts for material updates
• DAT terms that expressly prohibit MNPI distribution; strong KYC and contractual restrictions
• Cooling-off periods, trading locks, and surveillance for DAT holders with potential MNPI
• Independent compliance oracles to verify disclosure fairness before access is granted

Risk-based DAT taxonomy

Implications for Issuers, Platforms, and Regulators

• Issuers: Treat any token-gated channel as potentially regulated disclosure. If it might move price, make it public-on-chain and off-chain-at the same time.
• Platforms: If DAT markets list tokens tied to information access, strengthen listing standards, disclosures, and surveillance similar to research distribution rules.
• Regulators: Provide guidance distinguishing compliant access tokens from vehicles that facilitate selective disclosure or MNPI monetization.

Conclusion: Build With Market Integrity in Mind

DATs are powerful: they can fund open data, align communities, and create programmable business models for research and analytics. But as Molidor emphasizes, without careful design they can recreate crypto’s insider trading problems inside TradFi’s legal perimeter. The way forward is not to abandon DATs-it’s to build them with synchronized public disclosure, cryptographic fairness, and strong compliance baked in. If tokenization is to modernize market infrastructure, it must also upgrade market integrity.