The SEC staff has issued a number of recent statements related to cryptocurrencies.

Existing Disclosure Requirements

On April 10, the SEC staff articulated how existing disclosure requirements under the federal securities laws apply to offerings and registrations involving crypto assets. The statement specifically addresses obligations under federal securities laws for offerings and registrations of (1) debt or equity securities of issues whose operations relate to crypto networks, applications, or assets; and (2) crypto assets offered as part of or subject to an investment contract security. 

In addition, the statement provides guidance for issuers on key disclosure areas, including descriptions of business, risk factors, description of securities, supply, governance, financial statements, and exhibits. In the statement, the SEC staff emphasize that disclosures under Regulation S-K and applicable SEC forms (including Forms S-1, 10, 20-F, and 1-A) must be clear, concise, and tailored specifically to each issuer’s particular business context. Public companies involved in crypto assets should carefully review this guidance in advance of filing their next Form 10-Q. 

SEC Staff Guidance on Stablecoins

The SEC staff has also recently issued a statement that, in its view, transactions in “covered stablecoins” do not involve the offer and sale of securities under the federal securities laws and do not need to be registered. Covered stablecoins can be redeemed for U.S. Dollars (USD) on a one-for-one basis and are backed by assets held in a reserve that are considered low risk and readily liquid with a USD value that meets or exceeds the redemption value of the stablecoins in circulation.

This article is part of a Fenwick "Securities Law Update" authored by David A. Bell, Ran Ben-Tzur, Amanda Rose, Wendy Grasso, and Merritt Steele.