SEC’s New Crypto Disclosure Guidelines: A Positive Step for Crypto Securities

Business Operations Need to Be Front and Center

One of the clearest messages from the SEC is that issuers must be specific about their business operations.

The guidance makes it plain: when a crypto asset is offered as part of an investment contract, the disclosure must cover the underlying business — not just the asset itself. Projects are expected to describe things like their development stage, technical milestones, revenue models, and the practical utility of the crypto asset.

Issuers must also explain how governance works: who can propose upgrades, who controls decision-making, and what systems are in place to manage changes to the network.

Importantly, the SEC stressed that broad statements about the “crypto industry” won’t cut it. Disclosures must be tailored to the unique characteristics of the project itself. Investors deserve to understand your business — not just get a crash course on blockchain technology.

Real Risk Disclosures — Not Just “DYOR”

Another strong theme from the SEC’s release is that risk disclosures need to be detailed, specific, and actually useful for investors.

This goes way beyond boilerplate language. Issuers should be disclosing risks around technology and cybersecurity vulnerabilities, liquidity issues, market volatility, and regulatory uncertainty — especially where different agencies like FinCEN, the CFTC, and others might have overlapping authority.

There’s a subtle but important shift here: the SEC is recognizing that crypto projects face unique risks, but they’re also saying those risks need to be owned and disclosed transparently.

Investors should not have to rely solely on “Do Your Own Research” disclaimers. If your project’s future depends on the success of an evolving, experimental blockchain protocol, say so — and explain what could go wrong.

Technical Details Matter More Than Ever

For years, some crypto issuers avoided offering much in the way of technical disclosures. Those days are over.

The SEC now expects issuers to get granular:

• Disclose smart contract audit results and who performed them.

• Explain token supply mechanics, including how minting and burning are controlled.

• Describe wallet requirements, typical transaction fees, and any technical barriers to usage.

• Detail the governance rights that tokenholders actually have, if any.

This level of transparency is essential because technical features can materially affect the value and functionality of a crypto asset — and by extension, the investment decision of a reasonable investor.

Simply put: If the security’s code controls the business logic, then the code is part of the security. Investors have a right to see it and understand it.

Governance and Financials Must Be Disclosed

The SEC also emphasized that disclosures around governance structures, key personnel, and financial statements need to meet the same standards expected in traditional public markets.

That means naming the people responsible for managing the project, explaining how decisions are made, and filing financial statements that meet SEC standards — audited where necessary.

The SEC even noted that smart contracts themselves should be treated like exhibits — meaning issuers will need to file the actual code and update it as changes are made.

This ties back to a fundamental investor protection principle: if the issuer is changing the way the asset or network operates, investors deserve to know.

A New Tone from the SEC: Ask Questions, Don’t Fear Wells Notices

Perhaps the most encouraging sign in all of this is the SEC’s tone.

For years, crypto projects feared that reaching out to the SEC would immediately put them on the agency’s enforcement radar. This guidance signals a real change: issuers are encouraged to ask questions, and the Division of Corporation Finance’s Crypto Assets and Cyber Unit is available to help — without automatically escalating inquiries into enforcement actions.

This more collaborative posture is badly needed. Clear communication and engagement between projects and regulators is the only path forward if the U.S. wants to remain competitive in the global crypto economy.

Final Thoughts: Better Disclosures Will Build a Stronger, Safer Crypto Industry

The crypto industry has matured significantly over the past decade. Once defined by anonymous founders and “move fast and break things” mentalities, today’s serious projects recognize that long-term success depends on more than just innovation — it depends on trust.

This new SEC guidance is not about stifling innovation. It’s about setting a baseline expectation that crypto projects must be as transparent, diligent, and accountable as any traditional company seeking to raise capital from investors.

Clear, specific disclosures about your business, technology, risks, and governance aren’t simply regulatory hurdles — they’re the building blocks of credibility. They show investors, users, and even future partners that your project is serious, mature, and built to last.

In an industry where reputations can be made or broken overnight, being legally sound is no longer optional — it’s a strategic advantage.

Projects that invest early in strong legal foundations are the ones that attract serious investors, survive market downturns, and scale successfully into mainstream adoption. Those who view compliance as an afterthought will find themselves outpaced — or worse, facing costly enforcement actions.

The SEC’s message is clear: if you want to play in regulated markets, you need to operate at regulated standards.

At Montague Law, we’ve spent years helping digital asset projects bridge the gap between visionary technology and responsible legal strategy. We know how to design disclosures that protect your project’s future while still honoring the ethos of decentralization and innovation.

If you’re preparing to launch a crypto asset, or if you’re wondering how these new disclosure expectations apply to your current operations, now is the time to act. Don’t wait until questions arise. Build it right from the start.

Contact us today to learn how we can help you stay compliant, stay credible, and stay ahead. Let’s work together to build a stronger, smarter crypto economy — one project at a time.