U.S. Securities and Exchange Commission Division of Corporation Finance clarifies disclosure expectations for crypto-related securities offerings and registrations

The U.S. Securities and Exchange Commission’s Division of Corporation Finance issued a statement clarifying how existing federal securities law disclosure requirements may apply to certain offerings and registrations involving crypto asset markets. The statement is framed as guidance for issuers that are offering or registering securities, and it does not address whether a particular crypto asset is or is not a security. The guidance is positioned as relevant to offerings and registrations involving equity or debt securities of issuers whose operations relate to networks, applications, or crypto assets, as well as crypto assets offered as part of, or subject to, an investment contract. It notes that registration or qualification is not required for an offering of a crypto asset if the crypto asset is not a security and is not part of or subject to an investment contract. The Division highlights disclosure areas it has observed in practice, including a crypto network or application’s development timeline, functions and processes, and clear disclosure of securityholder rights such as dividends, profit-sharing, or voting rights, and provides examples ranging from blockchain developers issuing debt or equity to issuers registering an investment contract in connection with an initial coin offering, issuing a token that is itself a security, or integrating non-fungible tokens into video games while issuing debt or equity. The Division and the SEC’s Crypto Task Force invited market participants to submit questions and feedback, and Commission staff indicated they are working on additional guidance on when and whether crypto asset issuers must register and what registration would entail.