The SEC’s Division of Corporation Finance has issued nonbinding guidance regarding the applicability of federal securities laws to crypto assets. The guidance emphasizes that companies dealing with tokens that might be considered securities must provide detailed disclosures about their business operations, token functionality, and revenue generation methods. While the guidance aims to clarify how federal laws apply to crypto, it did not definitively categorize any specific digital assets as securities. Companies are encouraged to disclose risks including price volatility and network vulnerabilities, as well as details about their technology, the structure of their token issuance, and the involvement of executives. The SEC stated that registration is not required for crypto offerings that do not qualify as securities. This initiative reflects the SEC's commitment to enhancing transparency and offers firms a path to establish credibility with regulators as they navigate a complex regulatory landscape. Commercial litigator Joe Carlasare welcomed the guidance as a move toward clearer regulatory expectations for the crypto industry.

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