On 1 July 2025, the U.S. Securities and Exchange Commission’s Division of Corporation Finance released a staff statement titled Crypto Asset Exchange-Traded Products – Division of Corporation Finance. The statement aims to provide clarity and guidance on the application of U.S. federal securities laws to disclosures made by issuers of crypto asset exchange-traded products (ETPs). It outlines key disclosure practices under the Securities Act of 1933 and the United States Securities Exchange Act of 1934, reflecting the staff’s observations during its review of recent ETP registration filings. This staff statement is directed at crypto ETP sponsors, legal counsel, compliance officers, and investment professionals involved in product development and US SEC reporting. The Division has expressly clarified that the statement is a staff view, not a rule, regulation, or official position of the Commission. it creates no new or additional obligations. The crypto asset ETPs discussed are not registered as investment companies under the Investment Company Act of 1940, and therefore are not subject to the Investment Company Act’s valuation, custody, or governance requirements.
Cover Page Disclosures
The US SEC requires crypton asset ETP issuers to include key offering details on the front cover page of the prospectus. For crypto asset ETPs, this includes disclosure of the initial offering price. The staff statement has observed that crypto asset ETP issuers often identify the initial authorised participant (AP) or initial purchaser as a statutory underwriter, which is consistent with regulatory expectations.
Prospectus Summary
Crypto ETP issuers are required to provide a clear, plain English summary of key aspects of the offering. Effective summaries identify the most significant elements of the offering and avoid simply repeating the prospectus text. The staff has noted disclosures that describe the trust’s investment objective, the underlying crypto assets, and the associated networks. crypto asset ETP issuers also disclose how underlying assets are managed, including any restrictions on usage, and the treatment of incidental rights such as forks and airdrops. A point consistently disclosed is that the crypto assets held per share will decrease over time as assets are sold to pay fees and expenses.
Risk Factors
The staff statement emphasises that risk disclosures must focus on material and crypto asset ETP issuer-specific risks. Generic risks that could apply to any crypto asset ETP issuer are discouraged. Examples of observed disclosures include risks related to the price volatility of crypto assets, theft or loss of private keys, market manipulation, and cybersecurity threats. Other risks relate to network attacks, concentration of ownership, loss of miner or validator incentives, competitive pressure, and dependency on third-party service providers, including APs and custodians.
Description of Business
Crypto asset ETP issuers typically describe the nature of the trust, its assets, and business operations. The staff statement has observed disclosures covering the characteristics of the underlying crypto assets, including how they are minted, staked, burned, and validated. Issuers also provide details on the associated crypto networks, such as consensus mechanisms, fee structures, and use cases. The statement notes that this information should be presented in clear and accessible language, avoiding unnecessary technical jargon.
Index or Benchmark
Where the ETP tracks an index or benchmark, the staff expects disclosure of the constituent platforms, methodology for calculation, and selection criteria. Issuers are also disclosing information about oversight committees, and whether the sponsor has the discretion to change the benchmark. Material changes to the benchmark should be communicated to investors in a timely and transparent manner.
NAV Calculation
Crypto asset ETP issuers must explain the methodology used to calculate the net asset value (NAV) of the trust’s assets. If the NAV methodology differs from that used for GAAP-compliant fair value, the differences must be clearly described. Where a third-party valuation service or a secondary benchmark is used, the sponsor’s agreements and licensing arrangements should be disclosed.
Service Providers and Custody of Assets
The operation of a crypto asset ETP often involves multiple service providers, including sponsors, custodians, and authorised participants. Crypto asset ETP issuers typically disclose the identity and material terms of agreements with these parties, many of which are filed as exhibits. With respect to custody, Crypto asset ETP issuers disclose storage practices (cold, warm, or hot wallets), whether assets are commingled, and who has access to private keys. They must also address whether and to what extent the custodian carries insurance and how coverage applies across customers.
Fees and Expenses
Disclosures must clarify how the sponsor fee is calculated and whether it covers specific operational costs. Any third-party transaction fees, limits on fees, or payment mechanisms using the trust’s crypto assets must be included. The staff also expects disclosures regarding any unassumed expenses or caps on costs imposed by the sponsor.
Description of Securities
Crypto asset ETP issuers are required to describe the nature and rights of the securities being offered. For crypto ETPs, this typically includes disclosure of voting rights (or their absence), the circumstances under which rights may be modified, and how investors are notified of amendments or termination of the trust agreement.
Plan of Distribution
This section outlines how securities will be sold. The staff has observed disclosures describing the creation and redemption process, involvement of APs, and how settlements occur, whether onchain or offchain. Crypto asset ETP issuers must disclose how market volatility or trading platform outages could affect the arbitrage mechanism, and under what circumstances creation and redemption may be suspended. Clear notification processes for such suspensions are expected.
Management and Governance
Crypto ETPs often do not have traditional boards or officers but rely on the sponsor’s directors and executives. Where the sponsor performs policy-making functions, relevant individuals must be identified with appropriate experience disclosure. Executive compensation rules may not apply, but fees paid to the sponsor or third-party providers must be disclosed.
Conflicts of Interest
The SEC expects clear disclosure of any actual or potential conflicts of interest. This includes whether the sponsor or insiders hold crypto assets or have market exposure that could bias their decisions. Crypto asset ETP issuers also disclose whether they have codes of conduct or pre-clearance procedures for transactions by employees or affiliates, and the sponsor’s experience with other ETPs and the crypto market.
Financial Statements
Where Crypto asset ETP issuers operate through multiple series trusts or partnerships, the SEC staff position is that the trust or partnership is the registrant, but separate financial statements should be provided for each series. Issuers must also assess materiality separately for each series under Regulation S-K and Regulation S-X.
Filing Fee Tables
Crypto asset ETP issuers registering offerings of an indeterminate number of ETP securities under Rules 456(d) and 457(u) must tag EDGAR submissions correctly. The correct “Type of payment” is “2” and “Security type” is “Exchange-Traded Vehicle Securities.” Failure to tag these fields correctly may prevent proper submission of post-effective amendments under Rule 424(i) and timely fee payments.
(Source: https://www.sec.gov/newsroom/speeches-statements/cf-crypto-asset-exchange-traded-products-070125)
