SEC Urges Detailed Disclosures for Crypto Companies Dealing in Potential Securities

The U.S. Securities and Exchange Commission (SEC) has issued a new staff statement urging crypto companies to provide clear and detailed disclosures when issuing or dealing with tokens that could be classified as securities. Released ahead of the SEC’s upcoming crypto roundtable focused on trading, the nonbinding guidance aims to clarify how federal securities laws apply to digital assets.

The SEC recommends companies be specific about their business models and the role tokens play within them. While the statement doesn’t define which cryptocurrencies are considered securities, it emphasizes that some may fall under existing investment contract rules, often referred to as "subject crypto assets."

The Division of Corporation Finance advised companies to disclose whether their operations involve the development of blockchain networks or applications, detail project milestones, and explain the intended use of their networks. Other key disclosure elements include the technology stack used, whether it’s open-source, token holder rights, and technical token specifications.

These recommendations are drawn from existing disclosures the SEC has reviewed, reflecting common practices among crypto firms. The agency clarified that this statement is not formal rulemaking and does not carry legal weight but is intended to provide transparency and support ongoing regulatory efforts.

This latest guidance follows previous SEC statements under Acting Chair Mark Uyeda that addressed issues related to stablecoins and memecoins. It aligns with the broader mission of the SEC’s new crypto task force to better define its jurisdiction over digital assets and promote investor protection in the rapidly evolving crypto space.

Crypto companies are encouraged to follow these recommendations closely as the regulatory landscape continues to develop. Clear and accurate disclosures will be critical in ensuring compliance and building investor trust.