SEC Outlines Disclosure Expectations for Offerings and Registrations of Securities in Crypto Asset Markets

On April 10, 2025, the SEC’s Division of Corporation Finance (the Division) released a statement providing its views on disclosure requirements for Offerings and Registrations of Securities in the Crypto Asset Markets.

Against the backdrop of the SEC Crypto Task Force's ongoing deliberations to develop a comprehensive regulatory framework for digital assets, the Division’s statement specifically addresses obligations under federal securities laws for offerings and registrations of (i) debt or equity securities of issues whose operations relate to crypto networks, applications, or assets; and (ii) crypto assets offered as part of or subject to an investment contract security.

The statement emphasizes that disclosures under Regulation S-K and applicable SEC forms (including Forms S-1, 10, 20-F, and 1-A) must be clear, concise, and tailored specifically to each issuer’s particular business context.

Issuers are cautioned against providing duplicative disclosures or relying excessively on technical language. Moreover, the statement provides that “each issuer should also consider whether it is permitted to provide ‘scaled disclosure’ with respect to any applicable disclosure requirements.”¹

Description of Business

Item 101 of Regulation S-K (and analogous rules for foreign private issuers and Reg A offerings) requires a narrative description of the material aspects of an issuer’s business, including its background, current operations, and anticipated future plans.

With respect to crypto-related business plans specifically, the Division has observed issuers providing disclosures addressing:

• The issuer’s specific business activity, such as operating or developing a network or application, and the current stage of development
• Whether the issuer intends to continue operating the business after launching a network or application and, if so, a description of planned business activities; otherwise, a description of how the business will be operated following launch, including whether another entity will manage these operations
• Milestones necessary to fully implement the business, including key technology-development milestones
• How the issuer currently generates or expects to generate revenue—or otherwise increase profitability or value
• Whether the crypto asset has any specific role or intended functionality within the issuer’s business or an associated network or application

The statement further notes that when an issuer is “developing or acquiring or intending to develop or acquire a [crypto] network or application,” they should provide the following disclosures in the description of their business:

• Identifying whether they are developing a network, application, or other crypto-related service; describing the current state of development; and noting any planned changes or expansions post-launch
• Providing a timeline and milestones for network or application development, including estimated costs, sources of funding, and how the issuer plans to achieve network maturity or deploy the application
• Summarizing the technology, including its architecture, software, cryptographic key management, consensus mechanism, transaction speeds, and applicable fees or reward structures
• Disclosing whether the technology is proprietary or open-sourced, and noting any licenses or intellectual property rights involved
• Discussing how transactions are validated, including block size or any other parameters that may affect network performance
• Describing how upgrades or forks to the network or application will be proposed, reviewed, and deployed
• Describing measures, if any, taken to ensure network and/or application security
• Providing a description of the network or application’s governance system, as applicable
• Clarifying each party’s responsibilities and level of governance authority if multiple entities (e.g., development teams, sponsors) are involved
• Explaining how the business will generate revenue (e.g., fees, subscriptions, token issuance) or otherwise realize profits, ensuring alignment of these projections with white papers and other public materials
• Indicating any specific functionality the crypto asset provides—such as governance, payments, or a representation of equity—and how it fits into the broader network or platform
• Outlining any operational plans post-launch, including detailed roles of the issuer and third-party participants, strategies for enhancing profitability, and the development of products or services within the network or application

Risk Factors

Item 105 of Regulation S-K—and corresponding provisions in Forms 20-F and 1-A—requires issuers to disclose the most significant factors that make an investment in their securities speculative or risky.

The Division outlines considerations for disclosing specific risks unique to crypto-related enterprises, including:

• Technological, cybersecurity, and operational implementation risks
• Risks related to crypto asset characteristics, such as volatility, valuation, liquidity, supply, and custody issues
• Legal and regulatory compliance risks, including required registrations with regulatory authorities such as FinCEN, state financial agencies, or the Commodity Futures Trading Commission (CFTC)

Description of Securities

Item 202 of Regulation S-K (and analogous provisions in Form 20-F and Regulation A forms) obligate issuers to provide a description of any securities being offered. The specific disclosure depends on the security, but generally involves discussing the rights, restrictions, and any special features associated with the security to ensure that investors understand what they are buying and how it fits into the issuer’s capital structure.

With respect to crypto-related securities, the Division expects issuers to address:

• Rights associated with dividends, voting, liquidation events, mergers, and network forks, as well as processes for transferring these rights and conditions for modifying them
• Technical requirements for holding, accessing, and transferring subject crypto assets, including wallet, key management, transaction fees, and processes
• Smart contract security audits, code modification processes, and record-keeping practices
• Governance of crypto asset supply limits, minting processes, redemption, burning procedures, reserved allocations, and lock-up arrangements, as well as identification of responsible entities managing and overseeing these processes
• Information regarding market makers, liquidity providers, and related distribution arrangements

Directors, Executive Officers, and Significant Employees

Item 401 of Regulation S-K (and analogous sections in Forms 20-F and 1-A) obligates issuers to disclose the identities and experiences of those who direct, manage, or significantly contribute to the business. This includes executive officers, directors, and employees with policy-making authority—even if they do not hold formal titles. Where another entity effectively manages or controls the issuer’s affairs, such as a sponsor in a trust-like structure, disclosure of those individuals may be required as well.

The statement acknowledges that crypto projects often involve multiple entities or contributors and stresses that disclosure should capture individuals with actual decision-making power in such arrangements. For instance, if a project relies on core developers who control network updates or a sponsor entity that sets key policies, the Division encourages issuers to:

• Identify all persons who perform policy-making functions typically performed by executive officers or directors, even if they do not hold formal titles
• Disclose any third party performing these policy-making functions, including disclosure of any fees paid to such third parties for performing these roles

Financial Statements

The statement does not provide crypto-specific guidance on this point but reminds issuers to provide complete and accurate financial statements in accordance with SEC regulations. For complex or innovative accounting matters, the Division strongly advises consultation with the SEC’s Office of Chief Accountant.

Exhibits

Item 601 of Regulation S-K (and analogous provisions in Form 20-F and certain Regulation A forms) instructs issuers to file instruments that define the rights of security holders as exhibits. Traditionally, this means charters, bylaws, indentures, or other contractual documents establishing shareholder or creditor rights.

In the crypto asset context, the Division acknowledges that these “instruments” may include network code or smart contracts if they effectively govern investor rights and obligations. For instance, if the token’s core functionality and any holder privileges (e.g., burning, minting, or voting rights) are determined by on-chain code, issuers may be required to file that code (in a readable format) as an exhibit. The statement also notes that updates to the code—which could alter token features—might necessitate amended exhibits.

Contacting the Division

The Division invites issuers to reach out for guidance or clarification through inquiries or requests for interpretive or no-action letters related to crypto asset disclosure obligations.

Interpreting the Division’s Guidance

The statement reflects the Division’s observations based on its review of past filings and its responses to common questions from market participants. It is intended to provide clarity to market participants while the SEC Crypto Task Force continues its efforts to develop legally binding regulations for registration and disclosure of crypto asset securities.

The statement suggests a shift in staff expectations around how crypto asset issuers should approach disclosures under existing securities laws. However, it remains the responsibility of each issuer to determine whether a crypto asset constitutes a security, and to tailor disclosures in a manner appropriate to its specific facts and circumstances.

Issuers should also be aware that, even where a crypto asset is not subject to SEC registration requirements, state or other federal regulatory regimes—such as those overseen by FinCEN, the CFTC, or state money transmission regulators—may still apply.

As is the case with other guidance published by the staff of the Division, the Division disclaims that its statement represents the views of the Division staff and “is not a rule, regulation, guidance, or statement of the SEC; the SEC has neither approved nor disapproved the statement; and “like all SEC staff statements,” it “has no legal force or effect.” By its terms, the statement does not alter existing legal requirements or create new obligations for any person.

For the latest cryptocurrency news and regulatory developments, visit our Fenwick Crypto Review.

Footnotes

¹ “Scaled disclosure” refers to a set of streamlined reporting requirements available under federal securities laws for certain categories of issuers, such as smaller reporting companies, non-accelerated filers, and emerging growth companies. These accommodations allow eligible companies to include reduced or simplified disclosures in both registration statements and ongoing periodic filings, compared to the more extensive requirements that apply to larger or more seasoned public companies.