On April 10, 2025, the SEC’s Division of Corporation Finance issued a staff statement (the “Statement”) titled “Offerings and Registrations of Securities in the Crypto Asset Markets.” This development underscores the Commission’s ongoing efforts to clarify how federal securities laws (and specifically certain disclosure obligations) apply to crypto asset issuers. Further, it narrows the gap that exists between antiquated portions of the securities laws and the issuance of digital assets; a gap that has presented a significant legal hurdle for market participants who sought a clear regulatory path to legally issue cryptocurrencies as securities.

While not an official rule or binding law, the Statement represents the first real set of guidelines for crypto-related offerings to “come in and register,” especially in light of the recent formation of the Crypto Task Force by Acting Chairman Mark T. Uyeda and the recent Senate confirmation of incoming Chairman Paul Atkins.

Background and Context of SEC Registration of Digital Assets

The line between regulated securities and non-security digital assets has long been a focal point for the SEC. As the crypto markets continue to evolve, some issuers have sought to comply with the existing securities laws by registering offerings under the Securities Act of 1933 or classifying tokenized instruments as securities under the Exchange Act of 1934.

Under the stewardship of Gary Gensler, the SEC had taken a “Regulation by Enforcement” approach that, unfortunately for issuers, meant that anyone seeking to comply with the existing securities laws, was likely to find themselves on the receiving end of a Wells Notice, or even an enforcement action. Companies that voluntarily sought no-action relief from the SEC could undergo lengthy and costly investigations, which either slowed their plans to enter the market in the United States or caused them to abandon their efforts entirely.

The SEC, under the current administration, seems intent on reversing Gensler’s approach, and builds on existing principles, offering specific examples of how to address disclosure requirements in Regulation S-K (and certain other forms like Form 20-F and Form 1-A) when dealing with crypto asset securities issuances. Although the Statement does not create binding laws or alter existing laws, it points to how the staff will interpret and enforce existing rules for crypto asset securities offerings.

New Disclosure Obligations for Crypto-Related Securities Filings

In the Statement, the SEC offers guidance on how digital assets issuers can properly disclose their offerings.

A. Description of Business

The Statement suggests issuers provide a detailed, tailored explanation of their core business, avoiding generic references to blockchain or crypto technologies that aren’t material to actual operations. Instead, the focus should be on:

• Divide current vs. future plans: Issuers should clearly distinguish what is already built or functional from forward-looking milestones. Remember to disclaim assurances as to specific future outcomes and/or results.

• Explain revenue and value models: Disclose how the enterprise plans to generate revenue or increase value—particularly if tied to any crypto asset’s adoption, utility, or price.

B. Risk Factors

The Statement emphasizes that risk factors for crypto offerings should be robust, specific, and clearly stated. In perhaps the most direct guidance contained within the Statement, the staff specifically points to key risk factors that it will want to see included, such as:

• Technology & Cybersecurity Risks: Vulnerabilities in consensus mechanisms, forks, wallet management, and the overall resilience of the network.

• Market & Liquidity Risks: Price volatility, limited exchange listings, and valuation challenges are among the many risks that issues need to make note of in their offering materials.

• Regulatory & Legal Risks: Potential classifications under money transmitter laws, or oversight by other regulators like the CFTC or state banking authorities. In addition, issuers must be cognizant of the fact that regulations can, and often do, change, especially with rapidly evolving industries, such as crypto and blockchain-based businesses.

C. Description of the Securities

Any offering involving crypto-related securities must include a clear, comprehensive description of the security itself. This can mean:

• Rights and Obligations: Voting rights, dividends or other profit-sharing distributions, potential liquidation preferences, and how (and by whom) such rights could be modified. It’s important to ensure that you have structured your entity’s formation and governance documents to be consistent with these rights, and don’t present any internal inconsistencies as to how decisions are made or how net cash flow is going to be distributed.

• Technical Specifications: Information on the underlying blockchain, whether code is open-source or proprietary, consensus mechanisms, smart contract logic, custody, and wallet requirements.

• Token Supply: Minting processes, potential burn mechanisms, lock-up periods, vesting schedules, and any treasury or reserve allocations should be specifically described.

D. Management and Third Parties

Disclosure rules require identification and background information for directors, executive officers, and significant employees—including third parties who effectively manage the issuer’s operations (e.g., a key developer, custodian, or sponsor of a crypto trust).

E. Financial Statements

Complying with applicable accounting rules remains paramount. Early engagement with the Office of the Chief Accountant can help clarify reporting questions unique to crypto, such as token valuation, revenue recognition, or how to treat forks and airdrops. Ensure that you have an accountant familiar with tax issues related to the purchase, sale, and distribution of digital assets.

F. Exhibits

When rights or obligations are encoded in smart contracts, those contracts may need to be filed as exhibits and updated if the code changes. The Statement reminds issuers that existing rules for seeking confidential treatment also apply to crypto-related filings.

Why The Statement Matters for Crypto Market Participants

There are several reasons why this Statement may make a difference in the market, including:

• Legislative Framework: As Congress currently considers proposed crypto market structure bills, such as the FIT21 Act, the GENIUS Act for stablecoins, and others, which all seek to establish federal frameworks for the regulation of digital assets, the Statement can assist Congress with the preparation of additional legislation that can provide a pathway for issues of cryptocurrencies to issue them legally, without forcing market participants to request interpretive guidance of a No Action letter from the SEC.

• Consistency With Existing Laws, but Less Hostile to Innovation: The SEC’s message remains clear—there are no “free passes” for crypto, but, the Statement illustrates the SEC’s commitment to fostering innovation and permitting the registration of crypto securities offerings in the United States, something that was rendered nearly impossible under the previous regime.

• Investor Protection: As crypto’s volatility and technological nuances can introduce significant risks, the Division’s focus on disclosure underscores the SEC’s commitment to transparency and investor protection above all.

Practical Compliance Tips

Given the Statement, it is incumbent upon any potential issuer of crypto asset securities to consider the following:

• Conduct a Thorough Legal Assessment: Determine whether a token or digital asset is likely to be classified as a security and whether the offering requires registration or qualifies for an exemption.

• Develop In-Depth Disclosures: Reflect technology, governance, supply, and market factors specific to the asset with specificity. Avoid recycled, vague, or boilerplate language that fails to capture the unique attributes of the project and don’t treat another issuer’s description as being a “one-size-fits-all” for your project.

• Anticipate Disclosures When Structuring Your Organization: Establish a corporate structure that facilitates compliance with disclosure requirements. This may include creating separate entities for different aspects of the project, ensuring clear lines of responsibility, and maintaining robust internal controls to support accurate and comprehensive disclosures.

• Monitor Ongoing Changes: Blockchains and smart contracts evolve over time. Revisit disclosures periodically to ensure they stay accurate and up to date.

• Seek Early Input: If uncertain about how to handle novel features or transactions, consult your legal counsel to determine if contacting the SEC staff or the Office of the Chief Accountant is an option. The Statement concludes with requests for interpretive guidance or the submission of a request for a No Action Letter. Under SEC administration, this wouldn’t have been advisable, however, under the new administration, issuers should give thoughtful consideration to this option.

• Stay Current: The newly formed Crypto Task Force or Congressional action could issue future guidance or legislation that would further inform these requirements. Keep an eye on evolving legislation, rulemaking and staff statements (including the recent guidance from the SEC regarding its view on memecoins and related tokens).

Looking Ahead

The Statement is a reminder that the SEC expects crypto issuers to fold their disclosures into the existing securities framework, rather than seek to carve out special exceptions. While it is not the final word—nor does it definitively resolve all gray areas—it sets a tone for proactive compliance and creates an opening for a potential path forward.

Many in the industry view this as a positive step toward clarity, though some may fear it indicates increasing enforcement risk. In reality, both can be true. The upshot is that organizations should strengthen disclosure practices to align with the SEC’s expectations and be prepared for heightened scrutiny as regulators refine their approach to digital assets.