For years, crypto founders and builders have been met with a familiar refrain from the SEC: “Just come in and register.”The problem? Nobody knew exactly how. Now, for the first time in a long time, we’ve got real movement.
Yesterday, the SEC’s Division of Corporation Finance issued long-awaited guidance outlining disclosure expectations for crypto asset securities. And while this doesn’t reinvent the regulatory wheel, it’s a big step toward clarity—especially for startups hoping to build legitimately in the U.S.
Here’s my breakdown of what this means and why it matters.
📘 A Roadmap for Disclosure Is Finally Here
The new guidance applies to crypto offerings and registrations under both the Securities Act of 1933 and the Securities Exchange Act of 1934, covering forms like S-1, 10, 20-F, and 1-A.
Bottom line: if you're offering a token that might be a security, you now have a playbook—albeit a complex one—to help you disclose the right information the right way.
🧱 Key Components of the SEC’s Crypto Disclosure Framework
1. Narrative Business Description
Startups must clearly explain:
What stage of development they're in.
How their crypto network or application works.
Their revenue model, especially if it involves token economics.
If you’re planning to launch a token and can’t articulate this yet, stop. Go back to the whiteboard before you go to the SEC.
2. Risk Factors
Expect to disclose:
Cybersecurity vulnerabilities
Legal and regulatory uncertainties
Market volatility & liquidity issues
Reliance on third-party networks or apps
This is where crypto lawyers finally come in. These disclosures open the door to real conversations with the SEC about managing these risks—not just dodging them.
3. Comprehensive Description of the Token
If you’re offering a crypto asset, you’ll need to explain:
Rights and obligations (e.g., dividends, voting rights, profit-sharing)
Smart contract mechanics, consensus design, transaction flow
Supply mechanics, including minting, lock-ups, and vesting
And if you're paying out dividends? That’s a big red flag for the Howey Test. Time to lawyer up and consider registering.
4. Smart Contract Code as Exhibits
If a smart contract defines any of the token's rights or rules, the code must be filed as an exhibit—and updated with any changes. This is the SEC's way of saying: show your work.
5. Financial Statements
If your token edges into “security” territory, your filings must include GAAP-compliant financials. For complex or novel situations, the SEC’s Office of the Chief Accountant is available for consultation.
🧠 Why This Guidance Matters
For the first time, the SEC is speaking the crypto industry’s language—smart contracts, consensus, on-chain functionality—and offering a framework for compliance.
This is a huge opportunity for builders to finally move out of the regulatory gray zone and into a structured disclosure process that (while still complex) is far better than navigating blind.
And for lawyers like me? It’s the start of a roadmap we’ve desperately needed to advise clients with confidence and clarity.
🎙️ Final Thoughts
This guidance doesn’t fix everything. There’s still a long way to go before the U.S. has truly crypto-native regulatory infrastructure. But this is a constructive step—a signal that the SEC is willing to evolve its processes for a blockchain-based future.
I’ll be covering more from today’s SEC crypto roundtable soon. Until then, I encourage founders, developers, and legal teams to dig into this guidance, talk to your counsel, and use this moment to build smarter.
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