US SEC Unveils New Rules for Crypto Securities Disclosure Amid Industry Changes

• The SEC has released new guidelines for companies that offer tokens to the public to meet the required disclosure standards in the market.
• The issuers must give sufficient information on their business models, risk profiles, and characteristics of crypto assets.

The U.S. Securities and Exchange Commission (SEC) has released new guidance on disclosures that companies that deal with crypto assets should provide to their investors as there is pressure for more regulation of the digital asset market. The move comes from the Division of Corporation Finance to give corporations guidance on token offerings where the security token may exist under federal securities law.

The guidance does not make all crypto assets securities but offers a useful reference point for companies active in this field in their interactions with the SEC. The Commission encourages full and accurate reporting of business activities, risks, and financial statements. This disclosure comes after the appointment of Paul Atkins as the new SEC Chair, which the market interprets as a shift towards filling gaps in the regulation of the crypto industry

Issuers Must Disclose Key Details on Business Models and Risks

Under the new guidelines, it is required to give sufficient information regarding the operations of the issuing of crypto assets. This includes how revenue is generated, important milestones in the evolution of the network, measures for validating transactions, and the governance framework.

The SEC emphasizes that issuers must provide all necessary information related to the crypto-asset and its value and functionality. These include the risks associated with liquidity, market volatility, market supply, and technological risks that are applicable to the industry.

The SEC also expects the issuers to provide comprehensive information relating to the technical features of the security. This includes the functional possibilities of smart contracts, the possibility to divide assets, and the rights of token holders. The guidance further aims to protect investors by providing them with information that can help them make their investment decisions. The Division of Corporation Finance noted that the guidance is a temporary measure pending the formation of further regulatory measures by the SEC Crypto Task Force.

Crypto Task Force to Host Public Roundtable for Industry Input

As we previously reported, SEC’s Crypto Task Force plans to host a public roundtable on April 11, which Commissioner Hester Peirce will lead. The event titled “Between a Block and a Hard Place: Tailoring Regulation for Crypto Trading” is set to elicit feedback from relevant parties in regard to providing more suitable regulation within the niche.

Commissioner Peirce has supported the Division’s disclosure guidance, stating on X that the SEC does not categorically call all cryptocurrency securities. 

“We’re not saying your crypto assets are securities, but if they are (and we’re working on clarifying that) or your company is involved in the cryptocurrencies, here’s some disclosure guidance.”

However, Peirce urged the firms to respect the new disclosure rules as the Commission seeks to achieve legal provisions.

The upcoming roundtable will include sections on how the existing regulations can be adapted to the cryptocurrency sector. It will also discuss how to achieve just the right amount of market stability and market innovation. The roundtable will take place at the SEC headquarters in Washington, D.C., and the public will be allowed to contribute their insights on the design of the regulations.