Dear IMC (@STAFF_Julie), please allow monster gems to be traded. They are rare and very valuable commodity.
The simple (and balanced) way to do so is to allow leveling monster gems to level 2 that would grant them 1/1 potential without any other benefits. Make it require 5-10k exp so it wont be profitable to buy them as fodder for other gems.
Edit: Before somebody says that players could reset them to level one by slotting into equipment and then take it out, level again and resell - i think of it as feature and not an exploit or abuse.