SEC Urged to Require Market-Maker Deal Disclosures
Blockworks wants the SEC to make token projects disclose market-maker loans, listing deals and token-paid promotion, but its own voluntary register shows that fewer than one in five records are complete.
Blockworks set out the request in a comment letter filed on October 20, the last day for public comment on the SEC’s Regulation Crypto Assets proposal. The draft would create two registration exemptions for investment contracts tied to crypto assets, plus a conditional safe harbor. One exemption covers raises of up to $5 million over four years, the other up to $75 million in any 12 months. Its disclosure rules would apply to issuers that choose to use them.
The letter draws on Blockworks’ experience running that framework. Its central argument is that the terms which matter most for a new token sit with the issuer, so the issuer should be the one filing them, in a standard format that stays on the public record.
What a wallet trail cannot show
When Coindoo traced the wallets behind a reported $330 million HYPE deal, the transfers were visible but the deal was not. The movements could not establish who the counterparty was, what it paid or whether it was free to resell. Blockworks’ register entry for Hyperliquid was assembled from public sources rather than filed by the project, and it lists six open items. That is the kind of gap the proposal aims to close.
Market makers quote buy and sell prices and hold inventory so trades can clear. For a new token, that inventory often comes from the project, and the terms of the handover set the incentives:
- Sold tokens belong to the buyer outright.
- Lent tokens must be returned. Some loans also carry an option to buy the tokens later at a fixed price, which pays the market maker if the price rises above that level.
- Tokens paid as compensation give the recipient a stake in the price with no duty to support trading.
On a block explorer, all three can look like the same transfer.
The chain shows
Amount, sending and receiving addresses, timing
Wallet balances and executed unlocks
Contract permissions and admin keys
Only the issuer can say
Whether tokens were sold, lent or paid as compensation
Who the counterparty is, the loan term and the vehicle used
Which balances it counts as circulating
Unlock schedules leave the same question open. They show when an allocation can move, not who holds it afterwards or on what terms. Blockworks’ letter calls a loan of unissued tokens to a market maker “among the most consequential facts for a newly launched token.” It argues that such a loan does not fit neatly into any of the draft’s existing disclosure topics.
The four items Blockworks wants in Rule 103
Rule 103 is the draft’s core disclosure requirement. It is principles-based: rather than handing issuers a fixed form, it sets ten broad topics, from token supply to governance, and leaves issuers to judge what is material under each. Blockworks wants that approach kept, but with worked examples and a standard format added, plus four items its own framework already requires:
Arrangements that move early float and price: market-maker agreements, including tokens loaned and the vehicle used; listing agreements and fees paid in the token; loans secured by unissued supply; protocol-owned liquidity; and purchased total value locked.
Compensation paid in the token: advisory fees and influencer deals, with the total allocation, who paid it and any lock terms.
Address-level identification: the contract and wallet addresses behind supply and governance claims, so those claims can be tested against chain data.
Supply methodology: how the issuer counts total, issued, unlocked and circulating supply, stated next to the figure itself.
The compensation item has an enforcement record behind it. In 2022, Kim Kardashian agreed to pay $1.26 million to settle SEC charges. She had promoted EthereumMax’s EMAX token on Instagram without disclosing the $250,000 she was paid. Anti-touting law already covers the promoter. Blockworks’ point is that Rule 103 does not directly ask the issuer to disclose what it pays.
Blockworks says it sent the letter in partnership with its Transparency Alliance. The alliance’s participants include market makers GSR, Wintermute and Keyrock, whose own agreements would fall under the first item.
How the voluntary register works
The Token Transparency Framework’s public register, last updated October 19, gives the SEC a working example of the system Blockworks describes:
223
records on file
118
filed by issuers
105
compiled from public sources
200
marked current
Each record shows its status openly. It is marked current or outdated, and complete or partial, with any open items counted. Many partial issuer filings in the listing are a single item short. Records Blockworks compiles itself are labelled as such and tell readers that an empty field is not proof that nothing exists. These are the same features the letter asks the SEC to require of any qualified repository.
Under the framework, projects draft and approve their own filings, and the issuer stands behind the content. Blockworks launched its RapidFile drafting tool in August 2026 to cut the time involved, and more than 75 projects have used it. In a Blockworks survey of 50 projects, two-thirds reported finishing in two working days or less, and most used no outside counsel. By comparison, the SEC’s burden estimate assumes 56 hours per startup-exemption issuer.
Blockworks also reports wide market coverage. By its internal analysis, tokens with records on the register, including those it compiled, accounted for roughly 55% of September’s U.S. spot trading volume on Coinbase, Gemini and Binance.US, excluding stablecoins.
How Blockworks would keep the record intact
Under proposed Rule 200(d), an issuer using the startup exemption would post its disclosure on a website of its choosing. Only a notice of reliance and, later, a transition report would go to the SEC. The SEC expects about 99 issuers a year to use that exemption and about 475 transition reports a year under the safe harbor.
The draft allows annual amendments without requiring earlier versions to be kept. The duty to keep the page public ends when the exemption period closes or the transition report is filed. The SEC’s own release asks how an investor could establish what an issuer had said at the time of a sale under that design.
Blockworks proposes two answers. First, amendments would become event-driven for a short list of discrete changes, with everything else updated annually:
New supply or unlock schedule
New market-maker or listing agreement
Exploit affecting the token
Change of contract address
Second, every version would sit in a public repository with permanent links, timestamps and a flag showing whether the filing is current. Suppose order-book depth on a token (the volume of buy and sell orders near the current price) thinned out in March. A reader could then check whether a market-maker agreement had ended in February. That would not explain the move by itself, but it would give a contractual event to set against the trading data.
The letter also asks the SEC to confirm that an issuer who keeps publishing after filing its transition report would not, by that act alone, be making a new promise to keep managing the project. Without that assurance, Blockworks argues, lawyers would advise projects to stop disclosing on the day they certify, just as federal reporting ends.
Who files, who publishes and who answers for it
The repository would be run by what Blockworks calls a Qualified Onchain Disclosure Agent. Using one would be optional. The agent would also run a filing tool that could pre-fill items from chain data, but nothing would be published until the issuer reviewed and approved it. Each material claim would carry one of three labels:
- observable onchain
- resting on the issuer’s attestation alone
- calling for legal judgment
The letter says the automated pre-filling is still in development.
| Party | Answers for | Exposure under the proposal |
|---|---|---|
| Issuer or other filer | Truth, completeness and timeliness of the content | Full antifraud and antimanipulation liability |
| Disclosure agent | Publishing what the filer attested, when it attested, unaltered | Conduct standard; not treated as making the filer’s statements, with no protection for fraud or recklessness |
| Exchange or custodian | Its own listing or custody decision | May rely in good faith on the record as a diligence input |
One question for the SEC is how much weight such a record should carry in listing decisions. The agent would vouch for its process rather than the content, and Blockworks says it would support legislation shielding qualifying agents from private lawsuits over statements filers attest to. The letter pairs that with safeguards:
- A relying firm would have to document its review and could not rely on a record it had reason to doubt.
- The protection would not cover fraud, recklessness, gross negligence or undisclosed conflicts.
The letter also sets out Blockworks’ own interest. Blockworks sells data and monitoring products to intermediaries, along with investor-relations software and ratings to token projects. It could charge for bulk and API access to a repository it operates. Its proposed criteria would let any qualifying provider act as an agent and bar agents from trading, issuance, underwriting and market making in the assets they cover. Blockworks says it seeks no exclusivity and no fee set by rule.
What happens next
The SEC will decide whether any of these recommendations reach the final rule. Before then, the public comment file should show how exchanges, market makers and issuer groups view the disclosure items as submissions are posted. The framework’s six-month refiling cycle for mature projects also makes April 2027 a natural point to see how continuing filings are kept up to date.
Signs of support
Exchanges and market makers in the comment file back disclosure of deal terms
The final rule adds a disclosure-agent route or any of the four items
Signs of resistance
Commenters back a central repository but oppose publishing deal terms
The final rule keeps self-hosted pages amended once a year
This article is provided for informational purposes only and does not constitute financial, legal or investment advice. Proposed regulatory requirements may change before adoption.
Alex is Editor-in-Chief of Coindoo and co-founder of Millennial Media Group, with nearly a decade of experience covering financial markets - crypto first, then everything else. It started in 2016 with Bitcoin. Like most people at the time, he didn't fully understand it - so he kept digging. Blockchain, tokenomics, the projects, the cycles. That curiosity never stopped, and eventually pulled him into traditional markets too: equities, commodities, macro. Not because he left crypto behind, but because you can't properly understand one without the other. What drives him is straightforward: he wants to know why something is happening, not just that it's happening. Most market coverage stops at the headline - price up, price down, here's a chart. Alex finds that kind of reporting actively unhelpful. If you walk away from an article without understanding the mechanism behind the move, what did you actually learn? He holds a degree in Tourism from New Bulgarian University - not the most obvious path into financial markets, but markets have a way of pulling in people who are simply too curious to stay out. He has authored over 200 in-depth analyses and more than 10,000 articles across crypto and traditional finance. He still thinks every day in markets teaches him something new. That's probably why he hasn't stopped.
