Authors: Liu Honglin, Shao Jiadian
On April 10, 2025, the U.S. Securities and Exchange Commission (SEC) Division of Corporation Finance released a heavyweight policy document: "Offerings and Registrations of Securities in the Crypto Asset Markets." Although the title is mild, it is essentially a standardized "disclosure document guidance" for token issuance in the Web3 industry.
This is not a new enforcement announcement or a penalty notice for a specific project, but a highly practical disclosure guideline. The SEC very rarely provides nearly four thousand words detailing: If you want to legally issue tokens and raise funds in the U.S., you must clearly and explicitly write these things.
You can consider it a manual for Web3 projects to enter the U.S. capital market, as well 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 a compliant path, attempting to raise funds publicly in the form of securities. Many projects have adopted the following methods:
• Registering for public offerings (similar to IPOs) through Form S-1 with the SEC;
• Using Reg A+ for small fundraising, bypassing the complete IPO process;
• Submitting Form 20-F to enter the U.S. market by overseas teams;
• Even issuing ETF products linked to tokens using a trust structure.
The SEC noticed that the registration documents submitted by different projects were varied, with some completely copying white papers, others piling up technical jargon without substantial content, and some even obscuring basic risk factors. To standardize industry practices, the SEC's Division of Corporation Finance issued this policy, listing the core content that must be disclosed when issuing tokens and raising funds. It does not have legal effect but has effectively become the industry's default registration reference standard.
The document begins by specifically stating: “to provide greater clarity on the application of the federal securities laws to crypto assets…”
— To provide clearer guidance on how federal securities laws apply to crypto assets.
Business Disclosure: It's not about dreams, but what you are actually doing
The SEC emphasizes that project parties must submit a complete description of their business. This requirement 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.”
In simple terms, you can no longer use "blockchain + future vision" narratives to fool investors; instead, you must clearly write:
• What project are you working on? Is it L2? DEX? GameFi? DePIN?
• What stage is the project currently at? Is there a mainnet? User numbers? On-chain active data?
• Will you continue to operate after launch? Will the project team dissolve? Or will it be handed over to a DAO? Does the DAO have a clear governance structure?
• How do you make a profit? Is there a clear monetization path? Through transaction fees, token premiums, ecosystem feedback?
• What exactly is the token for? Is it for governance, gas, service vouchers, or an investment certificate?
The SEC specifically points out that you cannot replace real business situations with "talking about technology and ecology," nor can you copy the white paper. 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, it includes the following content:
The objectives, uses, and operational mechanisms of the network and applications;
Consensus mechanisms, transaction confirmation methods, block size, gas mechanisms, transaction throughput;
Wallet systems and key management methods (whether self-custodied, whether multi-signature supported);
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 conducted through smart contracts, have these contracts been audited? Who maintains them? Are they upgradeable?
The SEC also requires projects to explain the roles of various participants in the network—including users, developers, validators, governance participants, and off-chain service providers—and their responsibilities and interactions. You can no longer just say, "We have a chain, it runs on-chain," but must explain the technical details, governance mechanisms, and upgrade logic of the chain as if describing a company's governance structure.
The above projects may not all apply to every project; the SEC does not mandate that all projects disclose this content but states, "If these contents are part of your project and are significant to investors, then you must disclose them."
Token Disclosure: If you are issuing securities, disclose according to securities standards
This part is written very straightforwardly by the SEC: If the token you issue falls under the category of securities (which is highly likely), then you must disclose its attributes and rights structure just like you would for stocks.
“Rights, obligations, and preferences… including voting rights, liquidation rights, redemption terms, etc.”
You need to answer the following questions:
Does the token represent asset income rights? Liquidation rights? Voting rights?
Is the token transferable? Are there lock-up, sales restrictions, or circulation limitations?
Does it have functions such as splitting, staking, repurchasing, or burning? 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 the DAO (e.g., 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 publicly available?
You can design your token model with strong technical logic, but ultimately you still have to translate this model into the language familiar to the SEC for review. At this point, it’s not about innovation but about “can you explain it clearly.”
Risk Disclosure: It's not just about price fluctuations; every point you worry about must be clearly stated
The SEC has always been particularly sensitive to risk disclosure. It emphasizes that risk is not a decorative 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 go beyond just “token price fluctuations”:
Risks related to the issuer's planned business operations, such as risks related to technology and network security, as well as the implementation of the issuer's business and reliance on other networks or applications.
Risks related to the securities, such as risks associated with any unique characteristics of the securities, including their form, price fluctuations, rights of holders or lack thereof, valuation and liquidity, supply and custody.
Risks related to 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 the Money Transfer Act, or registration with other regulatory agencies, such as federal or state banking regulators or the Commodity Futures Trading Commission.
All of these must be disclosed truthfully, even if they sound like they would “affect fundraising.” The SEC's bottom line is "do not hide," or else you can expect a letter from the SEC.
Issuer Management Information Disclosure: Who are the decision-makers, who received the money, must all be disclosed
You can claim to be a DAO project or that a foundation controls it, but the SEC will not listen to your self-introduction; it looks at “who is making decisions, who can issue tokens, and who has received substantial benefits.”
“Disclosure is required for persons who do not hold formal titles… but who perform policy-making functions.”
Who is the management team of the issuer? Information related to their identity and experience.
Who participated in project governance, funding decisions, and roadmap formulation?
Which service providers are operating the project? Were consulting fees or technical fees paid?
Do any employees or teams hold a large number of tokens?
Is the smart contract or network code entrusted to a specific team/organization?
Even if you use the most complex structural packaging, you must disclose the substantial controlling parties. The SEC is not hostile to structural design; it just wants you not to “hang a sheep's head while selling dog meat.”
Financial and Audit: You are not just issuing a token; you are bringing yourself into the SEC's view
Many project parties might say, “I don’t have operating income; why do I need financial statements?” The SEC does not want you to beautify financial statements but to clarify these matters:
Is the token counted as an asset? Is the pre-sale treated as a liability?
Is the token used as payment for services? How is it measured?
Do token incentives, token releases, staking interest, etc., constitute expenses?
Is there an on-chain income stream? How is it confirmed and audited?
Does the token generate dividends, rebates, or compound interest similar to traditional securities?
The original text states: “Issuers are required to provide financial statements that comply with applicable requirements…”
You need to submit financial statements in standard formats (especially for S-1, Reg A+, 20-F pathways) and provide clear accounting treatment for assets, liabilities, income, and expenses related to the token.
The SEC specifically pointed out that if the rules of your token are written in the contract and the on-chain governance rules are determined by code, then this 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)…”
In other words:
The smart contract address, version, and audit status must be disclosed synchronously;
Whether an upgrade logic exists and whether it is controlled by a minority must also be explained;
If the contract controls the token release rules, then this is your project's "securities agreement."
Summary by Lawyer Mankin: Compliance is a collective coming-of-age ceremony for the industry
Many entrepreneurs' first reaction upon seeing this SEC document is: “It’s too complicated; let’s go to another country.” However, this document is not a rejection of Web3 but rather an invitation for Web3 to enter the public market and institutionalization.
It is not a red light but a roadmap.
Do you want to truly access traditional institutional funds? Do you want your project to trade in mainstream markets? Do you want to survive long-term without fearing any judicial letters? Then you must adapt to these disclosure requirements, manage your tokens with the logic of securities, and operate your project with the mindset of a public company.
The SEC does not tell you how to design your 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 U.S. market.
If you are a Web3 project party, trading platform, fund, lawyer, or auditing institution—now is the time to take this document and re-examine everything you are preparing to submit to the SEC.
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