Key Takeaways:
- The U.S. Securities and Exchange Commission (SEC) encourages crypto businesses to offer in-depth disclosures if their tokens might be classified as securities.
- Recent SEC guidance highlights the importance of clarity regarding operational practices and the function of tokens, without specifying which cryptocurrencies are categorized as securities.
- This advisory is part of the SEC’s initiative to provide more information on applying federal securities laws to digital assets, in light of an upcoming crypto task force’s activities.
On Thursday, the SEC made a public recommendation stating that crypto companies involved with tokens potentially classified as securities should deliver detailed disclosures. The SEC released its most recent staff statement on disclosures ahead of its upcoming roundtable focused on trading. This effort aims to clarify how federal securities laws pertain to cryptocurrency.
The guidance advises companies to be explicit about their business operations and the role of their tokens. This approach is derived from previous observations of companies’ disclosures. The statement notably refrains from targeting specific cryptocurrencies as securities.
The SEC noted, “These offerings and registrations may involve equity or debt securities of issuers whose operations relate to networks, applications, and/or crypto assets.” It also emphasized the need for transparency regarding the rights of token holders and any technical specifications.
Further, the Division of Corporation Finance is extending its views in anticipation of the SEC’s new crypto task force, which will work on better defining its jurisdiction within the digital asset landscape. It’s important to note that this advisory is not formal guidance and lacks legal authority.
Previous Staff Statements: Earlier directives from Acting Chair Mark Uyeda have addressed topics such as stablecoins and memecoins.
Read more: SEC Staff to Reassess Biden-Era Crypto Guidance Amid Regulatory Shakeup
