The US Securities and Exchange Commission (SEC) continues to provide clearer direction for registrants in the crypto space with its recent release of new staff views on how federal securities laws apply to the registration and offering of crypto-related securities. The guidance, released on April 10, covers a wide range of topics including business operations, token design, governance, technical specifications, and financial reporting.
While the document does not create new regulations, it does reflect the SEC staff’s current expectations for how firms should prepare their filings. It also signals a more open approach to crypto regulation under the SEC’s new leadership.
The guidance focuses on filings under the Securities Act of 1933 and the Securities Exchange Act of 1934, aiming to assist entities involved in token launches or platforms built on blockchain infrastructure. Companies are expected to clearly outline their revenue strategy, project milestones, and technical framework behind any associated digital assets. It is crucial for firms to describe how a crypto asset functions within the business, whether it enables transactions, governance, or access to services.
Disclosure requirements play a key role in the SEC’s expectations for registrants. Companies must disclose investment risks, including token volatility, liquidity limitations, legal classification, and security vulnerabilities. Dependencies on third-party blockchains or external networks should be disclosed, along with 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 are conveyed or modified. Details about how tokens are created, whether the supply is fixed, and whether vesting or lock-up periods apply are also required. In cases where a smart contract governs token behavior, the code must be filed as an exhibit, with updates reflected in future amendments.
Financial disclosures must adhere to established accounting standards, and companies facing novel reporting situations are encouraged to consult the SEC’s Office of the Chief Accountant.
Although the staff guidance is nonbinding, it serves as a valuable reference point for crypto-related entities navigating registration. The SEC’s increased attention to crypto markets reflects the growing number of firms seeking to operate within the public markets and raise capital through blockchain-based products.
In conclusion, the SEC’s new staff views provide much-needed clarity for companies in the crypto space, outlining expectations for filings related to token launches and blockchain platforms. By adhering to these guidelines, firms can better navigate the regulatory landscape and ensure compliance with federal securities laws.