Authors: Liu Honglin, Shao Jiayi
On April 10, 2025, the Division of Corporation Finance of the U.S. Securities and Exchange Commission (SEC) released a heavyweight policy document: "Offerings and Registrations of Securities in the Crypto Asset Markets". Although the title is mild, for the Web3 industry, it is essentially a standardized " disclosure document guide " for coin issuance.
This is not a new law enforcement announcement, nor is it a penalty notice for a certain project, but a disclosure guide with great practical significance. The SEC very rarely uses nearly 4,000 words to tell you point by point: If you want to issue tokens and raise funds in compliance with regulations in the United States, then you must write these things down and explain them clearly.
You can think of it as an instruction manual for Web3 projects to enter the U.S. capital market, and also as a clear boundary map drawn by the SEC for the industry.
Background: Why did the SEC issue this document?
In recent years, more and more Web3 projects have taken the compliance path and attempted to raise funds publicly in the form of securities. Many projects have adopted the following methods:
• Register a public offering (quasi-IPO) with the SEC via Form S-1 ;
• Using Reg A+ to raise small amounts of capital and bypass the full IPO process;
• Submit Form 20-F by overseas team to enter the US market;
• Even use trust structure to issue ETF products linked to tokens.
The SEC has noticed that the registration documents submitted by different projects are varied, some are completely copied from the white paper, some are full of technical terms but have no substantive content, and some are even more secretive about basic risk factors. In order to regulate industry operations, the SEC's Corporate Finance Department issued this policy, which lists the core content that must be disclosed when issuing coins to raise funds. It has no legal effect, but in essence has become the industry's default registration reference standard .
The beginning of the text specifically mentions: "to provide greater clarity on the application of the federal securities laws to crypto assets..."
——Provide clearer guidance on how securities laws apply to crypto assets.
Business disclosure: Don’t talk about dreams, but talk about what you are doing
The SEC emphasizes that project owners must submit a complete description of their business. This is standard in traditional IPOs and is now explicitly introduced into the token registration process.
“Issuers are required to disclose information material to an understanding of the general development of their business.”
To put it bluntly, we are not allowed to fool investors with the narrative of "blockchain + future vision" anymore, but to write down the facts clearly:
• What project are you working on? L2? DEX? GameFi? DePIN?
• What stage has the project reached now? Is there a mainnet? Number of users? On-chain activity data?
• Will you still operate after the launch? Will the project be dissolved? Or will it be handed over to the DAO? Does the DAO have a clear governance structure?
• How do you make money? Is there a clear path to monetization? Relying on handling fees, token premium, or ecosystem feedback?
• What is the purpose of Token? Is it governance, gas, service certificate, or investment certificate?
The SEC specifically pointed out that "talking about technology and ecology" cannot replace the actual business situation, nor can the white paper be copied. The materials must reflect your specific, clear, and quantifiable business model .
Technical structure disclosure: If you say there is a chain, you must explain the structure of the chain clearly
The biggest highlight of this SEC document is that the technical disclosure section is written in unprecedented detail.
“The objectives of the network and how the technology… functions and accomplishes its objectives, including architecture, software, key management…”
Specifically include the following:
The goals, uses, and operating mechanisms of networks and applications;
Consensus mechanism, transaction confirmation method, block size, Gas mechanism, transaction throughput;
Wallet system and key management method (whether it is self-hosted, whether it supports multi-signature);
Is the network open source? Who owns the IP? Are there any patent disputes?
Is there a network upgrade mechanism? What is the upgrade proposal process? Who has execution authority?
If governance is done through smart contracts, are these contracts audited? Who maintains them? Are they upgradeable?
The SEC also requires projects to explain the responsibilities and interaction methods of various roles in the network, including users, developers, validators, governance participants, off-chain service providers, etc. You can no longer just say "we have a chain, it runs on the chain", but you must explain the technical details, governance mechanism, and upgrade logic of the chain like describing the governance structure of a company.
The above items may not all apply to every project, and the SEC does not force all projects to disclose these contents. Instead, it says "if these contents are part of your project and are significant to investors, then you must disclose them."
Token disclosure: If you issue securities, you should disclose them according to the standards of securities.
The SEC is very straightforward in this section: If the token you issue falls into the category of securities (which it probably is), then you must explain its attributes and rights structure clearly, just like disclosing stocks.
“Rights, obligations, and preferences… including voting rights, liquidation rights, redemption terms, etc.”
You need to answer the following questions:
Does the token represent the right to asset income, liquidation rights, or voting rights?
Are tokens transferable? Are there any lock-up, sales ban, or circulation restrictions?
Does it have functions such as splitting, pledging, repurchasing, and destruction? How are the rules set?
What is the token generation mechanism? Is it a one-time mint? Periodic release? Is there an upper limit?
Is there a special token structure for DAO (such as governance token vs. economic token)?
Does the contract support upgrades? If so, who has the authority to modify the logic?
Has a third-party audit been conducted? Is the audit report public?
You can design your token model with strong technical logic, but in the end you still have to translate the model into the language that the SEC is used to for review . At this time, it is not about innovation, but about whether you can explain it clearly.
Risk disclosure: not just price fluctuations, but every point you are worried about should be clearly stated
The SEC has always been the most sensitive about risk disclosure, emphasizing that risk is not a decoration of the process, but an obligation of the project.
“Material factors that make an investment speculative or risky… including technological, regulatory, and operational risks.”
The risks you must disclose are not just “Token price fluctuations”:
Risks associated with the Issuer’s planned business operations, such as risks related to technology and cybersecurity, and the implementation of the Issuer’s business, and reliance on other networks or applications.
Risks associated with securities, such as risks relating to any unique characteristics of a security, including its form, price volatility, the rights of holders or the lack thereof, valuation and liquidity, supply and custody.
and risks associated with other applicable laws and regulations, such as whether the Issuer’s activities require registration with the Financial Crimes Enforcement Network or certain state financial services agencies under money transmitter laws, or with other regulators, such as federal or state banking regulators or the Commodity Futures Trading Commission.
These must be disclosed truthfully, even if they sound like they will "affect financing." The SEC's bottom line is "don't hide," otherwise you'll be waiting for the SEC to send you a letter.
Disclosure of information by the issuer’s management : Who is the trader and who took the money must be written down
You can say that you are a DAO project, or that you are controlled by a foundation, but the SEC will not listen to your self-introduction. It looks at "who is making decisions, who can issue tokens, and who gets the actual benefits."
“Disclosure is required for persons who do not hold formal titles… but who perform policy-making functions.”
Who are the issuer's management? Information about their identities and experience
Who is involved in project governance, funding decisions, and roadmap development?
Which service providers are operating the project? Have the consulting and technical fees been paid?
Are there any employees or teams holding a large number of tokens?
Will the smart contracts or network code be hosted on a specific team/organization?
Even if you use the most complex structure packaging, you must disclose the actual controlling party. The SEC is not hostile to structural design, it just wants you to not "sell dog meat under the guise of sheep meat".
Finance and Audit: You didn’t just issue a token, you brought yourself into the SEC’s sight
Many project owners will say: "I don't have any operating income, why do I need financial statements?" The SEC does not ask you to beautify your financial statements, but to make these things clear:
Are tokens counted as assets? Are pre-sales treated as liabilities?
Do you use tokens to pay for services? How to measure?
Do token incentives, token release, staking interest, etc. constitute fees?
Is there an on-chain revenue stream? How can it be confirmed and audited?
Do tokens generate dividends, rebates, or compound interest similar to traditional securities?
The original text reads: "Issuers are required to provide financial statements that comply with applicable requirements..."
You need to submit financial statements in standard formats (especially S-1, Reg A+, and 20-F paths) and make clear accounting treatments for token-related assets, liabilities, income, and expenses.
The SEC specifically pointed out that if your token rules are written in the contract and the on-chain governance rules are determined by the code, then the code itself must be submitted as an Exhibit (formal appendix) and updates must be synchronized.
“We have observed filings include as an exhibit the code of the smart contract(s)…”
That is:
The smart contract address, version, and audit status must be disclosed simultaneously;
It is also necessary to explain whether the upgrade logic exists and whether it is controlled by a few people;
If the contract controls the token release rules, then this is the "Securities Agreement" of your project.
Lawyer Mankiw concludes: Compliance is a collective coming-of-age ceremony for the industry
Many entrepreneurs’ first reaction to this SEC document is: “It’s too complicated, let’s do it in another country.” However, this document does not reject Web3, but rather invites Web3 to move to the open market and become institutionalized .
It's not a red light, it's a road map.
Do you want to get real money from traditional institutions? Do you want your project to be traded in the mainstream market? Do you want to survive for a long time and not be afraid of any legal letters? Then you must adapt to this disclosure requirement, manage your tokens with the logic of securities , and operate your project with the awareness of a public company.
The SEC does not tell you how to design a token, but it tells you what information cannot be hidden and what structures cannot be manipulated. This list is your compass for compliant financing in the US market.
If you are a Web3 project, trading platform, fund, lawyer, or auditing agency - now is the time to pick up this document and review everything you are preparing to submit to the SEC.
