US SEC Division Releases Guidance On Disclosure Requirements For Crypto Securities

As the US SEC hurtles toward regulatory clarity, a division has published disclosure guidance for crypto assets that are securities. The SEC’s Division of Corporation Finance shared the guidance for issuers urging clear disclosures for business description, risk factors, and financial statements.

SEC Drops Fresh Guidance For Issuers Of Crypto Asset Securities

The US SEC’s Division of Corporation Finance has released disclosure requirements for securities in crypto-asset markets. According to the press release, the Division notes that disclosure requirements are mere guidance for issuers designed to smoothen the curve for market participants.

Under the requirements, the US SEC urges securities issuers to describe their businesses in clear language. Per the guidance, the issuers should disclose information on revenue generation, timelines for network development, procedures for validating transactions, and network governance procedures.

Furthermore, the US SEC makes a case for specifying risk factors relating to the issuer’s business operations. Other risk disclosures will relate to the security, its volatility, liquidity, and supply.

The Division specifies a “materially complete description” of the securities with issuers urged to spell out the rights of holders. Per the guidance, information around the technical specifications revolving around the crypto asset divisibility and smart contract functionalities.

The Division’s guidance comes on the heels of the US Senate confirming Paul Atkins as SEC Chair. According to the division, the guidance will serve as a stopgap for issuers pending proper regulations by the Crypto Task Force.

Securities Watchdog Provides Securities Clarity For Cryptocurrencies

The Crypto Task Force, led by Commissioner Hester Pierce, is spearheading the push for disclosure requirements for securities issuers. However, Pierce declared support for the new guidance by the Division of Corporation Finance.

“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,” said Pierce on X.

The disclosure guidance extends to financial statements, exhibits, and details of significant employees.

The US SEC has rolled out an avalanche of securities clarifications since the start of the year. Last week, the SEC clarified that dollar-backed 1:1 stablecoins are not securities since they are used primarily for payments.

Previously, the US SEC exempted proof-of-work mining from securities obligations. In a remarkable development, the SEC clarified that securities regulations do not apply to memecoins.