The Staff highlighted disclosure-related observations and issues identified during reviews of digital asset ETP filings.
On July 1, 2025, the Securities and Exchange Commission’s (SEC’s) Division of Corporation Finance (the Staff) published a Statement on Crypto Asset Exchange-Traded Products (the Statement). The Statement addresses the application of certain disclosure requirements under the Securities Act of 1933 (Securities Act) and the Securities Exchange Act of 1934 (Exchange Act) to offerings and registrations of securities by issuers of crypto asset exchange-traded products (crypto ETPs) on national securities exchanges. The Staff emphasized that “[d]isclosure should be presented in clear, concise, and understandable language, without overly relying on technical terminology or jargon.”
The Statement is the Staff’s latest publication on how it views the federal securities laws applying to a specific aspect of the digital asset economy since President Trump issued an executive order on digital assets (for more information, see this Latham blog post) and the SEC established a Crypto Task Force (for more information, see this Latham blog post).
It follows a similar April 2025 Staff statement that addresses the application of certain disclosure requirements under the securities laws to disclosure documents relating to offerings of equity or debt securities in the digital asset markets (for more information, see this Latham blog post).
As with previous Staff guidance concerning digital assets, the Statement is descriptive not prescriptive, and does not append absolute or relative value to the various disclosures the Staff has chosen to highlight. It also does not purport to address all material disclosure items. “Each issuer,” the Staff noted, “should consider its own facts and circumstances when preparing its disclosures.”
The Statement notably does not apply to crypto ETPs that are registered as investment companies under the Investment Company Act of 1940 (Investment Company Act). Therefore, the Staff noted, “crypto asset ETPs are not subject to the requirements of the Investment Company Act, such as the legal requirements related to valuation and custody of fund assets.”
While not directly applicable to so-called “crypto-treasury companies” that hold a significant amount of digital assets on balance sheet but also operate other businesses, these companies should also consider making the disclosures recommended by the guidance in future filings, as the staff of the SEC may look to the guidance as they review filings from these companies.
Staff Observations on Crypto ETP Filings
Cover Page: The Staff observed cover page disclosures that identify the initial authorized participant1 (AP) or the initial purchaser as a statutory underwriter, consistent with SEC rules applicable to prospectus cover page disclosures.
Prospectus Summary: Issuers of securities in general must, when useful, provide a summary of the information in the prospectus in plain English.
Disclosures in the prospectus summary that the Staff observed include:
- An overview of the trust;
- The investment objective of the trust;
- The reference index or benchmark being tracked;
- A description of the underlying cryptoasset(s) and the associated network(s);
- Policies regarding the management of the underlying cryptoasset(s);
- Policies regarding any incidental rights associated with the underlying cryptoasset(s), including forks and airdrops; and
- Potential asset holding declines resulting from sales to cover fees and expenses.
Risk Factors: Issuers of securities in general must disclose material factors (fact-specific rather than generic) that make an investment in the issuer and product speculative or risky.
Disclosures of risks that the Staff observed include:
- Risks related to the underlying cryptoasset(s) and cryptoasset markets, including price volatility theft of private keys and other hacking;
- Risks of fraud, manipulation, front-running, wash-trading, security failures, or operational problems on cryptoasset trading platforms;
- Risks of cyberattacks;
- Risks of underlying asset ownership concentration; and
- Risks from competing products.
Description of Business: Issuers of securities in general must provide a narrative description of the material aspects of their business.
Material business descriptions that the Staff observed include information about:
- The underlying cryptoasset(s) and associated network(s), including “the initial development team, the method of generating, minting or mining the crypto asset(s), the process for staking, locking and burning the crypto asset(s), the process for validating transactions, the consensus mechanism, use cases, and any fees associated with use of the crypto network(s) or applications.”
- The underlying index or benchmark; and
- The methodology employed to calculate net asset value, including any third-party agreements for use of a methodology.
The Trust’s Service Providers, Custodians, and Associated Fees and Expenses: Issuers of securities in general must provide information material to an understanding of the issuer’s business, “which may include the extent to which the issuer’s business is materially reliant on third parties.”
Matters related to third parties that the Staff observed in disclosures include identification of and filing as exhibits:
- Authorized participants and related agreements;
- Counterparties and related agreements;
- Custodians and related agreements and policies;
- Fee arrangements with third parties; and
- Sponsor fees and calculation methodology.
Description of Securities: Issuers of securities in general must provide a description of the issuer’s securities, including shareholder voting rights (if any).
Information related to shareholder voting rights that the Staff observed include:
- Any limitations or restrictions on voting rights;
- How the rights of shareholders may be modified; and
- How shareholders will be notified of material amendments to or termination of the trust agreement.
Plan of Distribution: Issuers of securities in general must provide information on the plan of distribution of securities offered and sold in a registered offering.
Information related to the plan of distribution that the Staff observed include:
- The mechanics of the creation and redemption process between the trust, the authorized participants, the custodian(s), and any other third-party service providers;
- The effects of price volatility, trading volume, and price differentials across cryptoasset trading platforms; and
- Whether and under what circumstances the sponsor may suspend creation and redemption orders and related shareholder notification.
Management: Issuers of securities in general must provide information relating to “the identity and experience of those entrusted with the management of the issuer, including executive officers, directors, and certain significant employees who make (or are expected to make) a significant contribution to the issuer’s business,” regardless of formal titles or positions.
Disclosures related to management that the Staff observed includes information on:
- Directors, executive officers, or other employees of any sponsor performing policy-making functions; and
- Fees paid to sponsors or third parties for performing such policy-making functions.
Conflicts of Interest: Issuers of securities in general must provide “material information about transactions with related persons and policies and procedures related to the review, approval, or ratification of transactions with related persons.”
Information related to existing and potential conflicts of interest that the Staff observed include:
- Whether the sponsor or any insiders hold the underlying cryptoasset(s) or have cryptoasset-related exposure that could create conflicts of interest;
- The sponsor’s experience sponsoring other ETPs, particularly in cryptoasset markets; and
- Whether the issuer has a code of conduct or policies for pre-clearance of transactions in the underlying cryptoasset(s) applicable to employees, sponsors, or affiliates.
Financial Statements: Issuers of securities organized as statutory trusts or limited partnerships that are registering the offer and sale of beneficial units or limited partnership interests in multiple series must provide financial statements of the trust or partnership, as well as separate financial statements of each individual series.
Information the Staff observed that issuers have separately provided, prepared, or evaluated includes:
- Separate financial statements and audit reports;
- Separate interim financial statements; and
- Separate assessments of materiality for Regulation S-K and Regulation S-X purposes.
Limitations on the Statement
The Staff noted that the Statement:
- may not identify all possible material disclosures;
- discusses disclosures that may not be relevant or applicable for all issuers;
- does not preclude scaled (i.e., less extensive) disclosure accommodations for smaller or newly public companies under the securities laws with respect to any applicable disclosure requirements.
