Regulatory Turning Point? SEC Releases New Guidelines for Crypto Asset Registration and Reporting

Author: Blockchain Knight

On April 10, the Financial Division of the U.S. Securities and Exchange Commission (SEC) released a new staff statement 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 about 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 regarding how companies should prepare their filing documents. It also indicates a more open approach to crypto regulation under the new leadership of the SEC.

Providing Clearer Guidance for Registrants

The guidance focuses on filing documents submitted under the Securities Act of 1933 and the Securities Exchange Act of 1934, aimed at assisting entities involved in token issuance or platforms built on blockchain infrastructure.

These filing documents may include registration forms such as the S-1 form for public offerings, the 10 form for reporting companies, the 20-F form for foreign issuers, and the 1-A form for Regulation A exemptions.

Companies should clearly outline their revenue strategies, project milestones, and any relevant technical frameworks behind digital assets. If crypto assets have specific functions in the business, such as supporting transactions, governance, or access to services, this information must be described in plain language.

The SEC also expects these descriptions to be consistent with the content shared in promotional materials such as white papers and developer documentation.

If development is still ongoing, the statement suggests that companies outline key milestones, expected timelines, sources of funding, and any roles the tokens or networks will play post-launch.

This includes explanations of consensus mechanisms, transaction fees, and whether the network uses open-source or proprietary software.

Disclosure Requirements

The SEC also listed expectations for investment risk disclosures, including token volatility, liquidity constraints, legal classifications, and security vulnerabilities.

For example, if a company's business model relies on third-party blockchains or other external networks, these 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 these rights are conveyed or modified. The document also requires details on how tokens are created, whether the supply is fixed, and whether vesting or lock-up periods apply.

If smart contracts control token behavior, the code must be submitted as an attachment, and any updates made to it should be reflected in future revisions. Additionally, companies must describe how token ownership is tracked, the tools required for asset transfers, and any fees associated with these 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 formal titles. For trusts or exchange-traded products, the disclosure should include information about the sponsors and their management.

Financial disclosures must adhere to established accounting standards, and the SEC encourages companies facing novel reporting situations to consult their Chief Accountant's office.

Although this staff guidance is not binding, it provides a reference point for crypto-related entities during the registration process. It reflects the SEC's increasing attention to the crypto market as more companies seek to operate in the public markets and raise funds through blockchain-based products.