SEC Offers Interpretive Guidance on Securities Disclosures in the Digital Asset Space

On April 10, 2025, the U.S. Securities and Exchange Commission’s (SEC) Division of Corporation Finance issued new aimed at providing regulatory clarity to the digital asset space. After years of silence or hostility from regulators, the SEC now updates the traditional disclosure rules for the new technology of blockchain and digital assets. By providing this long-sought clarity, the SEC addresses the unique aspects of blockchain technology and also provides issuers a path to satisfy complex compliance requirements. To come within the SEC’s remit, note that these rules apply to digital assets which are securities. The leading tests of whether an asset is a security comes under the (footnote 8).

Specifically, this latest update clarifies disclosure obligations under federal securities laws for issuers in the , covering key disclosure requirements under Regulation S-K, Securities Act registration forms (such as Form S-1) and Exchange Act forms (such as Form 10), while also offering insight into the SEC’s views on foreign private issuers using Form 20-F and exempt offerings under Regulation A.

Key Points:

• Plain English: Issuers must provide clear, concise and understandable descriptions of their business, avoiding overly technical jargon.
  • The details that matter for digital assets need to be disclosed - issuers are now expected to explain how consensus mechanisms work, who holds the admin keys and how they control them, how a protocol’s smart contracts are audited or changed and more.
• Risk Factors: Disclosures should cover the notable risks specific to digital assets - price volatility, tech risks, cybersecurity risks and legal and regulatory risks. This includes whether the issuer’s activities may require it to register with the Financial Crimes Enforcement Network, state financial services agencies, federal or state banking regulators or the CFTC.
• Token Details: The guidance addresses specific aspects of token securities that would need to be disclosed such as holder rights, vesting details for insiders, technical specifications on how new tokens are minted and how ownership is maintained and verified, wallet compatibility (custodial, noncustodial) with the token, information around the total token supply, whether the token supply is capped or inflationary, whether and how tokens can be burned, details around any market maker agreements and more.
• Governance: Issuers should disclose who can change the rules that impact token holders and how – whether on-chain (via governance votes in a DAO, for example) or off-chain via a corporate board meeting.
• Smart Contract Exhibits: Where smart contracts impact investor rights and/or obligations, the underlying smart contract code must be included as an exhibit to disclosures, recognizing that code is a part of the legal equation for digital assets. Issuers are required to update these exhibits to reflect any subsequent changes in the code.

Why It Matters:

• For the first time, issuers in the digital asset industry have a real sense of what the SEC expects from them. Rather than the confusion overhang of the past or a cold directive, the SEC’s statement feels like an open invitation to discuss, troubleshoot and consider requests for interpretive guidance or no-action relief. Regulation by enforcement this is not.
• The tech of crypto finally comes to the fore. While crypto issuers were always expected to disclose material facts, there was little formal SEC guidance on how the specifics of blockchain technology should be disclosed. Now, the SEC is providing guidance that addresses the tech like consensus mechanisms, block size, gas fees, burning, reward mechanisms and more.
• As we have written about , this move is part of the SEC’s broader pivot. Under Commissioner Hester Peirce and the newly formed Crypto Task Force (launched by Acting Chair Mark T. Uyeda in January), the SEC is actively engaging with industry, soliciting feedback and ideas and rolling out clarifying guidance on , and mining.

What's Next:

• Market participants can engage more confidently in capital raising and registration efforts now that they’re equipped with a detailed framework tailored to crypto’s unique technical and legal complexities.
• Big questions remain – this guidance does not address network decentralization as a limitation on the application of the Securities Acts, nor does it offer any discussion around assessing when an offer or sale of digital assets is an offer or sale of securities. Crypto projects and investors will still need to think carefully about how to comply with U.S. securities laws.

Bottom Line:

This new guidance is another encouraging step in the SEC’s newfound drive to provide the industry with greater clarity, but it won’t answer every question surrounding compliance with existing securities laws. These are not new rules, and yet this guidance does something equally difficult and important in trying to translate the historical rules around securities disclosure for the new world and unique tech of digital assets and blockchain.

This guidance brings the SEC get back to basics: helping companies raise capital, protecting investors and making markets more transparent and efficient.