On April 10, the U.S. Securities and Exchange Commission (SEC) Division of Finance released a new staff opinion outlining how federal securities laws apply to the registration and issuance of Crypto-related securities.
The statement covers a range of topics, including how companies should present information on their business operations, token design, governance, technical specifications, and financial reporting.
While the document does not establish new regulations, it reflects the current expectations of SEC staff on how companies should prepare filings. This also shows that the SEC has taken a more open attitude towards Crypto regulation under the new leadership.
Provides Clearer Guidance for Registrants
The guidance focuses on filings under the Securities Act of 1933 and the Securities Exchange Act of 1934 and is intended to assist platform entities involved in token offerings or built on blockchain infrastructure.
These filings may include registration forms such as Form S-1 for public offerings, Form 10 for reporting companies, Form 20-F for foreign issuers, and Form 1-A for Regulation A exemptions.
Companies should clearly outline their revenue strategy, project milestones, and the technical framework behind any relevant digital assets. If a crypto asset has a specific function in the business, such as supporting transactions, governance, or access services, that information must be described in plain language.
The SEC also expects these descriptions to be consistent with what is shared in promotional materials such as white papers and developer documentation.
If development is still ongoing, the statement recommends that companies outline key milestones, expected timelines, sources of funding, and any role the token or network will play after launch.
This includes an explanation of the consensus mechanism, transaction fees, and whether the network uses open source or proprietary software.
Disclosure requirements
The SEC also lays out expectations for disclosures about investment risks, including token volatility, liquidity constraints, legal classifications, and security vulnerabilities.
For example, if a company’s business model relies on a third-party blockchain or other external network, those dependencies should be described. The same applies to any arrangements with market makers or custodians.
Issuers must disclose whether tokens have voting rights, profit-sharing mechanisms, or redemption procedures, and how those rights may be conveyed or modified. The document also calls for details on how tokens are created, whether the supply is fixed, and whether vesting or lock-up periods apply.
If smart contracts control the behavior of tokens, the code must be submitted as an attachment, and any updates to it should be reflected in future amendments. In addition, companies must describe how token ownership is tracked, the tools required to transfer assets, and any fees associated with those transfers.
Companies must also disclose information about leadership and key personnel, including individuals or entities that may play a central role in decision-making but do not hold a formal title. For trusts or exchange-traded products, disclosures should include information about the sponsor and its officers.
Financial disclosures must follow established accounting standards, and the SEC encourages companies facing new types of reporting situations to consult with their chief accounting office.
Although the staff guidance is non-binding, it provides a reference point for Crypto-related entities during the registration process. It reflects the SEC's growing focus on the Crypto market as more companies seek to operate in the public markets and raise funds through blockchain-based products.
Joy
