On the heels of other guidance issued by the US Securities Exchange Commission's (SEC) Division of Corporation Finance (Division), the Division released a statement (Statement) on 10 April 2025 addressing its views about, among other things, certain disclosure requirements for certain registration forms under the Securities Act of 1933, including Form S-1, and registration forms under the Securities Exchange Act of 1934, including Form 10. As Form S-1 is used by commodity based exchange-traded products (ETPs), including spot bitcoin and ether ETPs, the Division's guidance will impact such ETPs and others that follow a similar registration path.
The Division cautioned that the Statement, which also includes a summary of certain observations about issuer practices, does not address all material disclosure items, that the topics covered may not be relevant for all issuers, and that each issuer should consider its own facts and circumstances when preparing its disclosures.
The Statement included, among other things, the following guidance:
- Disclosure should be tailored to the issuer's business, presented clearly and concisely, "without overly relying on technical terminology or jargon";
- Disclosure should address risks relating to a material associated network or application; and
- Investors should understand what the security represents. In the context of crypto assets, the disclosure could address, as applicable, (i) supply, (ii) rights, obligations and preferences, and (iii) technical specifications.
The Division included a footnote clarifying that nothing in the Statement was intended to convey that registration or qualification is required in connection with an offering of a crypto asset if the asset is not a security and not part of or subject to an investment contract.
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