The U.S. Securities and Exchange Commission (SEC) has released new guidance targeting issuers of crypto-based exchange-traded products (ETPs).
Valuation and Benchmarking Requirements
Issuers must explain how net asset value (NAV) is calculated and disclose which crypto exchanges are used for pricing. This ensures investors understand how the product’s value is derived.
Custody and Service Providers
The SEC requires disclosures on who holds the crypto assets, whether they’re stored in hot or cold wallets, and if they’re insured. Issuers must also name custodians and other key service providers involved in managing the ETP.
Governance and Product Risks
Issuers should outline the unique risks associated with crypto, including price volatility, cyberattacks, and liquidity issues. A clear description of the product’s structure, objectives, and operations is also required.
While the guidance doesn’t introduce new regulations, it sets a clear standard for what the SEC expects in crypto ETP disclosures, enhancing market trust.
