On July 1, 2025, the staff of the Division of Corporation Finance at the U.S. Securities and Exchange Commission (the "SEC") issued another in a series of statements regarding crypto assets. This particular statement, titled "Crypto Asset Exchange-Traded Products," (the "Statement") details how certain disclosure requirements under the federal securities laws apply to offerings and registrations of securities by issuers of crypto asset exchange-traded products ("crypto asset ETPs"). The Statement applies to crypto asset ETPs with the following characteristics:
- Investment products listed and traded on national securities exchanges, but not registered as investment companies under the Investment Company Act of 1940;
- Typically structured as trusts that hold spot crypto assets or derivative instruments that reference crypto assets, and such trusts issue securities and register their offerings and securities under the Securities Act of 1933, as amended ("Securities Act") and Securities Exchange Act of 1934, as amended ("Exchange Act"), as applicable; and
- Issuers are subject to the anti-fraud provisions of the federal securities laws.
The Statement addresses common questions and issues arising under the disclosure obligations of the federal securities laws when crypto asset ETP issuers register securities offerings under the Securities Act or classes of securities under the Exchange Act, as follows:
| Document Section | Requirements | Staff Observations or Best Practices |
|---|---|---|
| Registration Statement Cover Page | Provide information related to the offering, including the offering price, the nature of any underwriting arrangements and the name(s) of the underwriter(s). | Disclosure of the initial offering price of the securities is required. Also identify the initial authorized participant (an "AP") or initial purchaser as a statutory underwriter. |
| Prospectus Summary | Provide a summary in plain English of the information in the prospectus where the length or complexity of the prospectus makes a summary useful. | Identify and highlight the most significant aspects of the offering in clear, plain language, such as clear descriptions of (i) investment objectives and tracking index/benchmark it plans to reference; (ii) underlying crypto asset(s) and associated network(s); (iii) policies regarding the management of and incidental rights associated with underlying crypto asset(s); and (iv) that the amount of underlying crypto assets per share held by the trust will decline over time as crypto assets are sold to pay trust fees and expenses. |
| Risk Factors | Discuss specific and unique material factors that make an investment in the issuer and product speculative or risky. | Disclosure will vary based on the nature of the security, the issuer's business, underlying crypto asset(s), tracking index or benchmark, and, if material, may include factors such as the characteristics of the security, limited rights of holders, insurance coverage, valuation and liquidity risks, technological risks, cybersecurity risks, and legal, regulatory and tax risks. |
| Description of Business — The Trust, Crypto Asset Prices, and Calculation of NAV | Provide a narrative description of material aspects of the issuer's business. | Provide clear, understandable disclosure regarding the trust's assets, including characteristics of the underlying crypto asset(s), and describe the applicable index or benchmark methodology and the methodology used to calculate net asset value. |
| Description of Business –Trust Service Providers, Custody of Assets, and Fees and Expenses | Provide information material to understanding the issuer's business, including the extent that such business is materially reliant on third parties. | Issuers generally rely on the services of a sponsor and third-party service providers, including crypto asset custodians, and disclose fees and expenses payable to the sponsor and such third-party service providers. Issuers must file (i) material contracts not made in the ordinary course of business and (ii) ordinary course contracts on which they are substantially dependent, as exhibits to a registration statement. |
| Description of Securities | Describe the issuer's securities. | Disclose the circumstances under which shareholders have voting rights, including any limitations or restrictions; if the rights of holders may be modified other than by at least a vote of a majority of shares outstanding; and how shareholders will be notified of material amendments to or termination of the trust agreement. |
| Plan of Distribution | Disclose the plan distribution of securities offered and sold in a registered offering. Issuers conducting delayed or continuous offerings under Securities Act Rule 415 must undertake to include related material information that was not previously disclosed in an effective registration statement. | Disclosure should address (i) the mechanics of the creation and redemption process between the trust, the APs, the custodian(s), and third-party service providers; (ii) if creation and redemption orders will be settled onchain or offchain and related risks; (iii) potential impacts on the arbitrage mechanism from price volatility, trading volume, and price differentials across trading platforms; and (iv) whether and when the sponsor may suspend creation and redemption orders and notification mechanisms. |
| Management | Disclose information relating to the identity and experience of the issuer's executive officers, directors, and certain significant employees, including persons who do not hold formal positions as executive officers or directors but who perform similar functions. | Crypto asset ETPs typically have a sponsor whose directors and executive officers perform functions similar to those of a board of directors and executive officers for the trust. To the extent that a sponsor performs policy-making functions, disclose information with respect to directors, executive officers, or other employees of the sponsor performing such functions. Disclosure regarding executive compensation of the issuer is not applicable in this situation; however, some issuers have disclosed fees paid to the sponsor or third party for performing such functions. |
| Conflicts of Interest | Disclose material information about transactions with related persons, and policies and procedures related to the review, approval, or ratification of transactions with related persons. | Issuers have disclosed (i) existing and potential conflicts of interest between the sponsor and its affiliates and the trust, including if the sponsor or insiders hold the underlying crypto asset(s) or have related exposure that could create conflicts of interest; (ii) whether the trust requires pre-clearance of transactions in underlying crypto asset(s); and (iii) the sponsor's experience sponsoring other exchange-traded products and in crypto asset markets. |
| Financial Statements | Disclose financial statement information in accordance with Regulation S-X. | For issuers organized as statutory trusts or limited partnerships that are registering the offer and sale of beneficial units or limited partnership interests in multiple series, the trust or partnership should be treated as the sole registrant, not the individual series. However, issuers should provide, for the sole registrant and for each series: (i) separate financial statements and audit reports; (ii) separate interim financial statements; and (iii) separate assessments of materiality for Regulation S-K and Regulation S-X. |
| Filing Fee Tables | Disclosure must be correctly "tagged" on EDGAR to prevent issues with future filings and payment of fees. | When registering the offering of an indeterminate number of exchange-traded vehicle securities in reliance on Securities Act Rules 456(d) and 457(u), the EDGAR fee tag for "Type of payment" is "2" and the EDGAR "Security type" is "Exchange-Traded Vehicle Securities." Failure to include these tags may prevent the issuer from being able to file a form of prospectus under Securities Act Rule 424(i) and pay its registration fee after the end of any fiscal year during which it has publicly offered securities. |
Read the full text of the Statement here.
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