What is a Reg D Offering?
Regulation D (Reg D) is a SEC exemption that allows companies to raise capital through private placements without the full registration process required for public offerings. Most tokenized securities in the US use Reg D to offer tokens to accredited investors legally.
Reg D Rules
Rule 504
- Up to $10 million in 12 months
- Can include non-accredited investors
- Limited marketing restrictions
- Rarely used for tokenized securities
Rule 506(b)
- Unlimited raise amount
- Up to 35 non-accredited sophisticated investors
- No general solicitation/advertising
- Most common for private placements
Rule 506(c)
- Unlimited raise amount
- Accredited investors only
- General solicitation allowed
- Must verify accredited status
- Common for tokenized securities
Accredited Investor Requirements
- Income: $200K individual / $300K joint for 2 years
- Net worth: $1M excluding primary residence
- Professional: Licensed broker, investment advisor, or certain credentials
- Entity: $5M in assets or all equity owners accredited
Benefits for Token Issuers
- Faster than full SEC registration
- Lower legal costs
- Can raise unlimited capital (506)
- Clear regulatory pathway
Limitations
- Securities have holding period restrictions
- Limited to accredited investors (506c)
- Must verify investor status
- Ongoing reporting requirements
Token Issuers Using Reg D
- Securitize-issued tokens
- Many real estate tokenizations
- Private fund tokens
- Some RWA protocols for US investors