April 2025 in Brief: Securities Law

SEC Staff Publishes Statements on Stablecoins and Crypto Disclosures

By Karen Liu, Reid & Wise LLC

The staff of the Division of Corporate Finance (“Staff”) under the U.S. Securities and Exchange Commission (“SEC”) published a Statement on Stablecoins (“Stablecoin Statement”) on April 4, 2025, and a statement on Offerings and Registrations of Securities in the Crypto Asset Markets (“Crypto Disclosure Statement”) on April 10, 2025.

The Stablecoin Statement discusses the application of the federal securities laws to “Covered Stablecoins,” which are stablecoins designed to maintain a stable value relative to the U.S. dollar (“USD”) on a one-for-one basis, redeemable for USD on a one-for-one basis (i.e., one stablecoin to one USD), and backed by assets held in a reserve that are considered low risk and readily liquid, with a USD value that meets or exceeds the redemption value of the stablecoins in circulation. As indicated in the Stablecoin Statement, it is the Staff’s view that Covered Stablecoins are not securities under both the Reves test and the Howey test. Therefore, the offer and sale of Covered Stablecoins, in the manner and under the circumstances described in the Stablecoin Statement, do not involve the offer and sale of securities within the meaning of Section 2(a)(1) of the Securities Act of 1933 (the “Securities Act”) or Section 3(a)(10) of the Securities Exchange Act of 1934 (the “Exchange Act”). Accordingly, persons involved in the process of “minting” (or creating) and redeeming Covered Stablecoins do not need to register those transactions with the SEC under the Securities Act or fall within one of the Securities Act’s exemptions from registration.

The Crypto Disclosure Statement addresses the Staff’s views about certain disclosure requirements with respect to offerings and registrations of securities in the crypto asset markets under Regulation S-K as they apply to Securities Act registration forms (such as Form S-1), Exchange Act registration forms (such as Form 10 and Form 20-F), and Form 1-A for offerings exempt from registration under Regulation A. The disclosures discussed in the Crypto Disclosure Statement include “Description of Business,” “Risk Factors,” “Description of Securities” (such as rights, obligations, and preferences; technical specifications; and supply of the security or subject crypto asset), “Directors, Executive Officers, and Significant Employees,” “Financial Statements,” and “Exhibits.” With respect to “Exhibits,” the statement notes that “to the extent that the rights, preferences, and obligations of holders of the securities are memorialized in smart contract(s) or otherwise programmed into the code of a network or application,” an issuer may file as an exhibit the code of the smart contract(s) and/or the network or application, and update any such exhibit in response to subsequent changes in such code.

The Stablecoin Statement and the Crypto Disclosure Statement, both published in April 2025, came on the heels of the Staff’s Statement on Certain Proof-of-Work Mining Activities in March 2025 and the Staff Statement on Meme Coins in February 2025. In addition, as part of an effort to provide greater clarity on the application of the federal securities laws to crypto assets, on January 21, 2025, the SEC launched a crypto task force dedicated to developing a comprehensive and clear regulatory framework for crypto assets. Commissioner Hester M. Peirce, who leads the crypto task force, made a statement on February 4, 2025, outlining ten focuses that the crypto task force is working on—namely, security status; scoping out; coin and token offerings; registered offerings; special purpose broker dealer; custody solutions for investment advisers; crypto-lending and staking; crypto exchange-traded products; clearing agencies and transfer agents; and cross-border sandbox.

To engage with the crypto task force’s efforts, the public may send an email to [email protected] with the subject line “Crypto Task Force Input,” or request in-person or virtual meetings with the crypto task force by completing a request form. In addition, previous and future crypto task force roundtables are available on the SEC website.

SEC No Action Letter Guidance Streamlines Rule 506(c) Accredited Investor Verification

By Jon K. Jurva, Ralph V. De Martino, Catrina Livermore, Cavas S. Pavri, and Cody C. Boender, ArentFox Schiff

On March 12, the U.S. Securities and Exchange Commission (“SEC”), via a No Action Letter, issued interpretive guidance clarifying what constitutes “reasonable steps” issuers can take to verify purchasers’ accredited investor status, as required under Rule 506(c) of Regulation D under the Securities Act of 1933, as amended (“Securities Act”).

The Letter provides an alternative path for compliance with Rule 506(c). This new guidance streamlines the verification process by allowing a high minimum investment amount to serve as a relevant factor in confirming accredited investor status.

In the No Action Letter, the SEC staff affirmed that an issuer may utilize the size of certain purchasers’ minimum investment amounts (including uncalled capital commitments), along with certain written representations by the purchaser, to verify a purchaser’s accredited investor status in an offering conducted under Rule 506(c). Issuers may require at least a $200,000 investment for natural persons and at least $1 million for legal entities.

The written representations from the purchaser would include (1) accreditation status and (2) that the investment funds are not borrowed or financed by a third party specifically for making the investment.

The new guidance alleviates uncertainty for issuers seeking to comply with Rule 506(c) when an accredited investor invests an amount equal to or in excess of the minimum investment amounts specified in the No Action Letter.

The SEC has updated its Compliance and Disclosure Interpretations (CD&Is 256.35 and 256.36) to note the interpretation in the No Action Letter.

For more details, please see our full March 19, 2025, post.

Paul S. Atkins Sworn In as SEC Chairman

By Rani Doyle

On April 21, 2025, Paul S. Atkins was sworn in as the thirty-fourth chairman of the SEC. This brings the total number of current SEC Commissioners to four (versus the normal five), including Mark T. Uyeda, Hester M. Peirce, and Caroline A. Crenshaw.

Presidential Memo Directs Immediate Repeal of Regulations Without Public Notice and Comment

By Reza Zarghamee, Amanda G. Halter, and Jillian Marullo, Pillsbury Winthrop Shaw Pittman LLP

Continuing with the Trump administration’s deregulatory agenda, the White House issued a Presidential Memorandum on April 9 titled Directing the Repeal of Unlawful Regulations. It instructs executive agencies to repeal regulations that, in the administration’s view, are “unlawful” in light of ten recent U.S. Supreme Court decisions. The directive builds on Executive Order 14219 and the broader “Department of Government Efficiency” initiative and calls for a sweeping review and repeal process.

• The memorandum instructs federal agencies to review, revise or repeal regulations that the administration views as inconsistent with ten recent U.S. Supreme Court decisions—without using the standard notice-and-comment rulemaking process.
• The directive relies on the “good cause” exception of the Administrative Procedure Act (“APA”), a procedural carveout that permits agencies to bypass public input when notice and comment would be impracticable, unnecessary, or contrary to the public interest.
• Among the regulations targeted are those that rely on the now-overturned Chevron doctrine, were issued without sufficient cost-benefit analysis, or are inconsistent with the definition of “waters of the United States” expressed in Sackett v. EPA.

It remains to be seen how executive agencies, including the SEC and EPA, plan to implement the executive memorandum. On its face, the memorandum opens the door for sweeping agency actions aimed at deregulation, especially given the enumeration of the Loper Bright decision as one of the core Supreme Court cases. The issue of deference to agency interpretations of the law is raised in an overwhelming majority of APA rulemaking challenges.

For more details and analysis, please see our full memorandum dated April 23, 2025.