The U.S. Securities and Exchange Commission (SEC) has emphasized the necessity for crypto companies issuing or dealing with tokens that may qualify as securities to provide comprehensive disclosures. This announcement, made on Thursday, comes ahead of the SEC’s upcoming roundtable dedicated to trading and represents a crucial step in clarifying the application of federal securities laws to crypto assets.
The SEC’s staff statement on disclosures, which can be viewed in detail here, stresses the importance of precision in the information that companies provide regarding their operations and the roles their tokens play within their business models. The recommendations are largely derived from the SEC’s observations of the disclosures made by existing crypto ventures.
Among the topics addressed are the various offerings and registrations that may involve equity or debt securities associated with issuers whose activities pertain to networks, applications, and crypto assets. The statement also underscores the consideration of crypto assets that may be offered as part of or in conjunction with an investment contract, referred to as a “subject crypto asset.”
Notably, the guidance stresses the importance of transparency concerning the development of crypto and blockchain networks. Companies are advised to disclose significant milestones in their projects, clarify the intended use of the network, and specify whether their technology is based on open-source foundations or proprietary systems.
Furthermore, the SEC has highlighted the need for clarity on token holders’ rights and the technical specifications of the tokens themselves. The Division of Corporation Finance has taken this opportunity to present its views ahead of the forthcoming work of the SEC’s new crypto task force, which aims to delineate its jurisdiction within the expanding digital asset space. It is essential to note that this staff statement does not constitute formal guidance or rulemaking and carries no legal force or effect.
Previous communications from the SEC, including those under Acting Chair Mark Uyeda, have also addressed related issues concerning stablecoins and memecoins, indicative of the rapidly evolving landscape of cryptocurrency regulation.
For further insights on this evolving regulatory framework, refer to the article discussing the SEC’s reassessment of Biden-era crypto guidance amid ongoing regulatory adjustments here.
