The U.S. Securities and Exchange Commission (SEC) has released new guidance to help crypto-related companies understand how federal securities laws might apply to their activities. The advice is mainly aimed at firms that issue or handle tokens which could be considered securities, urging them to be more transparent about their operations.

In a statement released on April 10, the SEC’s Division of Corporation Finance explained that the goal is to provide clearer direction on how securities laws intersect with crypto assets.

The Division clarified that this guidance reflects current observations of disclosures made by crypto businesses and responds to specific concerns raised by industry players. While the statement itself doesn’t carry legal weight, it encourages crypto companies to enhance their disclosures. This includes clearly explaining their core business, how their tokens work, and how they make—or plan to make—money.

The guidance also suggests that companies should clarify whether they plan to stay involved in the project after launching the network or app, and if not, who will take over those responsibilities.

Additionally, companies are advised to be open about the technology behind their offerings. This includes disclosing whether their blockchain uses proof-of-work or proof-of-stake, details about transaction speeds, block sizes, reward structures, and security protocols. They should also state if the protocol is open-source.

The SEC emphasized that no registration is required for crypto offerings that don’t meet the definition of securities or investment contracts. However, the guidance doesn’t specify which digital assets fall into the securities category—something still left to interpretation.

Joe Carlasare, a commercial litigator, called the move a “welcome and refreshing step” towards regulatory clarity. He noted that by following these guidelines, crypto companies can build stronger relationships with regulators and demonstrate a genuine commitment to transparency and accountability.

The SEC also pointed out the importance of disclosing all potential risks—like market volatility, cybersecurity threats, and issues around asset custody—on top of the usual operational, legal, and regulatory risks.