On July 1, 2025, the U.S. Securities and Exchange Commission’s Division of Corporation Finance released new guidance. This guidance clarifies its disclosure expectations for crypto asset exchange-traded products (ETPs). The staff statement is non-binding. However, it provides a detailed roadmap. This roadmap shows how issuers can satisfy their obligations under the Securities Act and Exchange Act. This is in connection with the registration of crypto-based ETPs. It is particularly important for those not regulated under the Investment Company Act of 1940.
This development is important for sponsors, custodians, and exchanges. It is also crucial for legal professionals working with digital asset investment vehicles. This is especially significant in light of the SEC’s evolving posture toward crypto markets.
See the full release here.
What Is Covered in the SEC’s Guidance?
The 12-page statement explains the SEC’s current views. It shows how crypto ETP issuers can meet federal disclosure requirements under Regulations S-K and S-X. The goal is to ensure investors receive clear, specific, and relevant information about the structure. They need to understand the risks, pricing mechanisms, and service providers involved in these products.
Key focus areas include:
1. Prospectus Cover Page and Summary
Issuers are expected to clearly identify the initial purchaser, such as an Authorized Participant. They should describe the investment objective in plain English. Additionally, issuers should disclose the nature of the underlying crypto assets or indices. The SEC highlights that per-share values typically decrease over time due to ongoing fee payments.
2. Risk Disclosures
A central emphasis of the statement is that ETP disclosures must go beyond boilerplate language. Issuers should provide tailored, product-specific risks, including:
- Price volatility and manipulation risks
- Blockchain network security concerns
- Custody risks and insurance limitations
- Regulatory uncertainty
- Concentration in specific crypto assets or service providers
3. NAV, Index Methodology, and Valuation
The staff urges issuers to include a narrative explanation of how the net asset value (NAV) is calculated. They should explain how benchmark prices are determined. Issuers need to describe what methodologies or fallback mechanisms are used when underlying markets are disrupted or illiquid.
4. Service Providers and Conflicts of Interest
Issuers should clearly identify the roles and relationships of all material service providers—particularly custodians, administrators, and sponsors. Disclosures should describe any potential conflicts of interest, fee arrangements, and governance structures.
5. Securities Registration and EDGAR Compliance
The SEC reminds issuers to tag filings appropriately when relying on automatic registration mechanisms under Rules 456(d) and 457(u). Incorrect tagging can delay fee payment processing and review timelines.
Why This Matters
The staff statement does not change existing law. It reflects the SEC’s expectations for how crypto ETPs should approach the disclosure process going forward. As more spot and derivatives-based crypto products enter the market, these clarifications could reduce friction in the registration process. They will help investors better understand the risks and mechanics of the products they are buying.
The SEC continues to express concern over the reliability and integrity of crypto markets. This guidance may be a step toward a more standardized framework for listing digital asset-backed securities.
What Should Issuers and Legal Advisors Do Now?
Firms considering new ETP filings—or updating existing ones—should closely review the July 1, 2025 guidance. They must ensure that their disclosures address the SEC’s areas of concern. These disclosures should be in plain, specific, and investor-focused terms. In particular:
- Review your risk factor disclosures for specificity and relevance.
- Ensure accurate and transparent explanations of pricing and NAV methodologies.
- Confirm the robustness of your service provider disclosures, including any conflicts of interest.
- Update EDGAR tagging and offering structures to align with SEC guidance.
Need Help Navigating ETP Filings?
Staying informed and compliant in this evolving landscape is more critical than ever. Whether you are an investor, entrepreneur, or business involved in cryptocurrency, our team is here. We provide the legal counsel needed to navigate these exciting developments. If you believe we can assist, schedule a consultation here.