SEC Provides Clarity for Crypto ETP Issuers

The U.S. Securities and Exchange Commission (SEC) has taken a decisive step to address regulatory ambiguities surrounding crypto-based exchange-traded products (ETPs). On July 1st, the agency issued new guidelines mandating issuers to disclose critical details, from net asset value calculations to custody arrangements. This MOVE aims to standardize disclosures while ensuring compliance with federal securities laws.

Issuers must now clearly outline investment objectives, index alignment, and NAV methodologies. Custodial safeguards, service provider contracts, and governance conflicts also fall under the disclosure umbrella. The SEC explicitly highlighted risks—liquidity, cybersecurity, tax implications—that require transparent communication to investors.

While crypto ETPs remain exempt from the Securities Company Act of 1940, they aren’t immune to antifraud provisions. The guidelines arrive as institutional demand for crypto ETPs surges, signaling a maturation of the asset class. Market participants view this as a precursor to broader acceptance, though operational hurdles persist.