SEC Clarifies Disclosure Requirements for Crypto Companies: New Transparency Standard

The US Securities and Exchange Commission (SEC) has provided detailed disclosure guidelines for crypto companies, emphasizing the importance of transparency and compliance with federal laws. These clarifications are especially relevant amid growing regulatory scrutiny of digital assets and investor desire for greater clarity.

Transparency without technical jargon

The SEC encourages crypto asset issuers to avoid complex terminology and excessive technical language. Instead, information about the company’s activities should be presented as clearly as possible for a wide audience. The business model, structure, and goals of the project should be described in an accessible form so that any interested parties can objectively evaluate the project.

Description of the stage of development and plans

Companies are required to clearly indicate at what stage of development their product is — be it a network, an application, or the crypto asset itself. It is also important to disclose the prospects: will the business continue after the launch? If so, it is necessary to describe the form and nature of further activities. Otherwise, it is necessary to clarify what steps will be taken and who will be involved in maintaining the system.

Disclosure of the economic model

The key aspect is explaining the mechanism for earning money. Issuers must explain how exactly the company makes money and whether the crypto asset will play a role in generating revenue. It is also necessary to explain whether the token or digital asset will be used within the product and what function it plays in the ecosystem.

Technical and legal details

The SEC requires disclosure of information on:

• Stage and timing of development
• Software infrastructure
• Transaction verification mechanism
• Reward system and fees
• Network security
• Legal protection of the technology, including licenses and intellectual property

The SEC’s position on stablecoins and memecoins

This week, the SEC also clarified its position on stablecoins, stating that they are not recognized as securities. A similar statement was previously made regarding memecoins, but the regulator warned of the risks of investing in such assets due to their volatility and speculative nature.

Thus, the SEC continues to create a more understandable and predictable regulatory environment for the crypto market, encouraging companies to be more open and responsible to investors.