Compliance for Cryptocurrency and Digital-Asset Issuers on OTC Markets
Cryptocurrency and blockchain companies seeking public quotation on the OTC Markets must navigate complex securities regulations. Following the SEC’s 2021 amendments to Rule 15c2-11, issuers must provide transparent, verifiable information before broker-dealers may publish or maintain quotations. This includes companies involved in token issuance, mining, decentralized finance, and blockchain infrastructure.
Regulatory Overview: Rule 15c2-11 and Crypto Issuers
Under Rule 15c2-11, broker-dealers cannot publish quotations without reviewing current public information. Digital-asset issuers must disclose detailed information about their blockchain operations, token economics, custody structures, and regulatory risks.
- Detailed business description of blockchain and token operations.
- Token issuance, redemption, and burn mechanisms.
- Custody and wallet security structure.
- Cybersecurity and AML/KYC programs.
- Regulatory status under SEC, CFTC, and FinCEN oversight.
Meeting OTC Markets Standards
To qualify for quotation or listing on OTC Markets, crypto and blockchain issuers must meet disclosure and governance requirements. The OTCQB Venture Market requires audited financials, shareholder minimums, and verified compliance certifications.
- Audited GAAP financial statements from a PCAOB-registered auditor.
- Minimum bid price of $0.01 and at least 50 beneficial shareholders.
- DTC eligibility and at least 10% public float.
- Annual and quarterly disclosures filed through OTCIQ.
- Certification of compliance with digital-asset and financial regulations.
Current-Information Disclosure via OTCIQ
Issuers must publish annual and quarterly financials, share structure data, material contracts, and risk factors through the OTCIQ Portal. Digital-asset issuers must ensure token offerings and blockchain activities are fully disclosed and compliant with securities laws.
Material Event Reporting
OTC Markets requires timely disclosure of major crypto-related events, such as token launches, cyber breaches, regulatory actions, or major partnerships. These must be filed promptly as Material Event Reports in OTCIQ.
Manager’s Certification with Respect to Current Information
Non-SEC reporting issuers must provide a Manager’s Certification confirming what reporting requirements the company is subject to, certifying that the company understands its reporting obligations, and confirming information regarding the company’s counsel, officers, directors, large shareholders, and convertible debt holders..
Due Diligence and Risk Management
Digital-asset issuers must provide full documentation addressing:
- Token classification under securities laws (Howey Test).
- AML/KYC compliance and internal controls.
- Cybersecurity and data protection protocols.
- Custody arrangements and wallet control procedures.
- Insurance coverage and system audit results.
Common Compliance Mistakes
- Treating token issuance separately from corporate disclosure obligations.
- Filing unaudited financial statements or using non-PCAOB auditors.
- Failing to disclose the token supply or blockchain structure.
- Ignoring timely Material Event reporting requirements.
- Assuming crypto-exchange trading satisfies Rule 15c2-11 compliance.
Conclusion
Crypto and blockchain issuers pursuing quotation on OTC Markets must maintain transparency and accurate disclosures under Rule 15c2-11. By providing current information, filing timely reports, and complying with OTCQB and regulatory standards, digital-asset issuers can achieve compliant market access. Hamilton & Associates Law Group assists issuers with 15c2-11 compliance, Form 211 filings, OTCQB applications, and Attorney Letters for digital-asset reporting companies.
If you have any questions about this article or would like to speak to a Securities Attorney, Hamilton & Associates Law Group, P.A. is ready to help. Our Founder, Brenda Hamilton, is a nationally known and recognized securities attorney with over two decades of experience assisting issuers worldwide with going public on the Nasdaq, NYSE, and OTC Markets. Since 1998, Ms. Hamilton has been a leading voice in corporate and securities law, representing both domestic and international clients across diverse industries and jurisdictions. Whether you are taking your company public, raising capital, navigating regulatory challenges, or entering new markets, Brenda Hamilton and her team deliver the experience, strategic insight, and results-driven representation you need to succeed.
To speak with a Securities Attorney, please contact Brenda Hamilton at 200 E Palmetto Rd, Suite 103, Boca Raton, Florida, (561) 416-8956, or by email at [email protected].
Hamilton & Associates | Securities Attorneys
Brenda Hamilton, Securities Attorney
200 E Palmetto Rd, Suite 103
Boca Raton, Florida 33432
Telephone: (561) 416-8956
Facsimile: (561) 416-2855
www.SecuritiesLawyer101.com
