Regulatory turning point? SEC releases new guidance on registration and reporting of crypto assets

Author: Blockchain Knight

On April 10th, the Financial Division of the U.S. Securities and Exchange Commission (SEC) released a new staff perspective, 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. Although 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. 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 participating in token issuance or building platforms based on blockchain infrastructure. These filing documents may include registration forms such as 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 strategies, project milestones, and the technical framework behind any related digital assets. If crypto assets have specific functions in the business, such as supporting transactions, governance, or service access, these must be described in plain language. The SEC also expects these descriptions to be consistent with promotional materials like white papers and developer documentation. If development is ongoing, the statement suggests that companies outline key milestones, expected timelines, funding sources, and any roles tokens or networks will play upon 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 restrictions, legal classifications, and security vulnerabilities. For example, if a company's business model depends on third-party blockchains or 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 about token creation, whether supply is fixed, and if vesting or lock-up periods apply. If smart contracts control token behavior, the code must be submitted as an attachment, and any updates should be reflected in future revisions. Additionally, companies must describe how token ownership is tracked, the tools required to transfer assets, and any associated transfer fees. Companies must also disclose information about leadership and key personnel, including individuals or entities that may play a core role in decision-making without holding formal titles. For trusts or exchange-traded products, disclosures should include information about sponsors and their managers. Financial disclosures must follow established accounting standards, and the SEC encourages companies facing novel reporting situations to consult the Office of the Chief Accountant. 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 focus on the crypto market as more companies seek to operate in public markets and raise funds through blockchain-based products.