Interpretation of the latest compliance guidance issued by the U.S. SEC on “Issuance and Registration of Crypto Asset Securities”

This article primarily discusses the declaration without subjective speculation about policies and macroeconomic situations, hoping to keep it pure.

Author:Aiying Team

Cover:Photo by Donovan Reeves on Unsplash

Official Guidelines:https://www.sec.gov/newsroom/speeches-statements/cf-crypto-securities-041025#_ftn1

On April 10, 2025, the U.S. Securities and Exchange Commission (SEC) Corporate Finance Division released a statement - "Statement on Crypto Asset Securities Issuance and Registration". As a global compliance and regulatory policy research institution, Aiying sees this statement not only as a reaffirmation of existing securities laws but also as an initial guide to the industry's future direction. However, it is important to emphasize that this statement is not a regulation, but merely a guidance recommendation from the U.S. Corporate Finance Division, based on observations of past disclosure practices and existing legal interpretations. It does not have legal binding force but reflects the SEC's regulatory expectations.

• Business and Governance: The issuer's business model, the token's function in the ecosystem, and governance structure (such as whether it involves centralized management or DAO).
• Technical Details: Blockchain's consensus mechanism (such as Proof of Work or Proof of Stake), smart contract design and audit status, and network security measures.
• Risk Factors: Including market volatility, regulatory uncertainty, hacking risks, and potential conflicts of interest (such as misaligned incentives between development teams and token holders).
• Management and Promoters: Background, roles, and compensation mechanisms of the core team, especially requiring transparency for projects dependent on individual influence.
• Use of Funds: Allocation plan for raised funds, such as for development, marketing, or operations.
  
  We believe these requirements are a direct response to the past "white paper era" when many projects raised hundreds of millions of dollars with just a few pages of vague vision, leaving investors almost unable to assess risks. Now, SEC requires disclosures to be specific and verifiable, avoiding empty marketing language. For example, an NFT platform might need to publicly disclose its smart contract code audit report or explain how funds will be used to improve user experience, rather than merely promising to "build the metaverse".

II. Regulatory Impact on Secondary Markets

The declaration not only focuses on initial issuance but also extends deeply into secondary markets, clearly defining compliance requirements for crypto assets on trading platforms. If a crypto asset is deemed a security, its trading on exchanges or other platforms will trigger additional regulatory obligations. We note that the declaration requires trading platforms to independently assess whether their listed assets are securities, meaning platforms must invest significant resources in legal analysis, hiring expert teams to review the token's issuance background and economic model. This process is not only costly but may also delay listing due to legal uncertainty. For instance, a token might be viewed as a security due to its initial crowdfunding method or ongoing team control, even if its function appears "decentralized".

1. For centralized exchanges (CEX), the declaration's impact is particularly far-reaching. If a platform lists securities-type tokens, it may need to register as a securities exchange or alternative trading system (ATS). This involves strict compliance processes, including implementing anti-money laundering (AML) and know-your-customer (KYC) measures, regularly submitting reports to the SEC, and ensuring transparency and fairness of trading systems. We've seen that in recent years, the SEC has taken enforcement actions against multiple unregistered crypto platforms, such as fining a major exchange hundreds of millions of dollars in 2023, indicating increasingly stringent secondary market regulation. Compliant CEXs may face short-term cost pressures, but in the long term, platforms meeting regulatory requirements will gain competitive advantages by attracting institutional clients and risk-averse investors, consolidating their market position.

2. Decentralized exchanges (DEX) face an even more complex situation. DEXs typically claim no centralized control, with trades automatically executed by smart contracts, attempting to evade traditional regulation. However, the declaration emphasizes the "substance over form" principle, pointing out that even if a platform is decentralized, if its function substantially facilitates securities trading, it may still fall within regulatory scope. For example, a DEX allowing users to trade tokens deemed securities, where governance token holders substantially influence protocol upgrades, might be viewed as a controlled entity. We believe this presents new challenges for DEX design: they may need to redesign governance models or enhance transparency through on-chain disclosures to reduce risks.

3. We predict that secondary market regulatory pressure will drive platform differentiation. Compliant large CEXs will dominate through resource advantages, similar to NASDAQ or NYSE in traditional finance; small CEXs or platforms evading regulation may exit the market due to enforcement risks. DEXs might split into two categories: one seeking regulatory exemption through technological innovation (like completely anonymous peer-to-peer trading), the other potentially compromising for partial compliance to enter mainstream markets. This differentiation will reshape crypto asset liquidity landscapes, influencing investor trading choices.

Of course, another highlight of the declaration is the SEC's openness to communication. It encourages issuers, platforms, and other participants to seek guidance through CryptoTaskForce, exploring compliance paths. We see this not just as a regulatory stance, but also a certain acknowledgment of innovation—the SEC recognizes blockchain technology's complexity and is willing to resolve gray areas through dialogue. However, the declaration's core objective remains investor protection. It clearly indicates that past non-compliant issuances led to significant investor losses, emphasizing transparency and anti-fraud importance.

Summary

The declaration ultimately does not provide a clear definition of whether crypto assets constitute securities, instead continuing existing securities law's flexibility through the Howey Test and case-by-case analysis. This approach indeed adapts to blockchain's complexity from a legislative perspective, but also leaves market participants facing uncertainty and compliance pressure. I believe the SEC intentionally maintains ambiguity to preserve regulatory space while indirectly regulating the market through disclosure and registration requirements. In the future, clear definitions may gradually form through enforcement cases or legislation, but the declaration itself is more of a starting point than an endpoint.

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