The U.S. Securities and Exchange Commission (SEC) has issued a new staff statement urging crypto companies to provide detailed disclosures if their tokens may be considered securities, emphasizing clarity about business operations and the role of tokens.
The U.S. Securities and Exchange Commission (SEC) has issued a new staff statement urging crypto companies to provide detailed disclosures if their tokens may be considered securities.
The Securities and Exchange Commission (SEC) is a US government agency responsible for regulating the securities industry.
Established in 1934, its primary mission is to protect investors by maintaining fair and transparent markets.
The SEC oversees public companies, investment advisors, and broker-dealers, enforcing laws such as the Securities Act of 1933 and the Securities Exchange Act of 1934.
With a focus on investor protection, market integrity, and capital formation, the SEC plays a critical role in maintaining confidence in the US financial system.
The SEC’s latest guidance emphasizes clarity about business operations and the role of tokens, but does not specify which ‘cryptocurrencies are securities.’ This nonbinding statement is part of the SEC’s effort to clarify federal securities laws’ application to crypto assets, ahead of a new crypto task force’s work.
Crypto companies issuing or dealing with tokens that may be securities should provide detailed disclosures. The guidance recommends that companies filing disclosures be precise about what their businesses do and what role their tokens may play in those ventures. This includes:
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Disclosing whether the business is developing crypto or blockchain networks
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Providing development milestones
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Explaining the purpose of the network
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Specifying whether the network is based on open source or other technology stacks
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Describing the rights of token holders
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Providing technical specifications
The statement said that much of it is based on observations about what companies have previously disclosed. The SEC reviewed previous disclosures to identify common practices and areas for improvement.
The guidance is nonbinding and does not specify which ‘cryptocurrencies are securities.’ The statement is part of the SEC’s effort to provide greater clarity on the application of federal securities laws to crypto assets. A footnote noted that the statement has no legal force or effect.
