What Is a Reg D Offering?
Regulation D (Reg D) is a Securities and Exchange Commission (SEC) exemption that allows companies to raise capital through private placements without the costly and time-consuming process of full public registration. Many tokenized securities and RWA products use Reg D to legally offer securities to qualified investors.
Reg D Rules
Rule 504
- Raise up to $10 million in 12 months
- Limited restrictions on investor type
- Less commonly used for crypto
Rule 506(b)
- Unlimited raise amount
- Up to 35 non-accredited investors (with disclosure)
- No general solicitation allowed
- Most traditional private placements
Rule 506(c)
- Unlimited raise amount
- Accredited investors only
- General solicitation permitted
- Requires verification of accredited status
- Most common for tokenized securities
Why Crypto Projects Use Reg D
Legal Compliance
Many tokens are securities under the Howey Test. Reg D provides a compliant path to offer them.
Access to Capital
Projects can raise significant capital from qualified investors without SEC registration.
Token Offerings
Security token offerings (STOs) frequently use 506(c) to legally distribute tokenized securities.
Accredited Investor Requirements
To participate in Reg D 506(c) offerings, investors must meet:
- Income: $200K+ individual ($300K+ joint) for two years
- Net worth: $1M+ excluding primary residence
- Certain professional certifications (Series 7, 65, 82)
Limitations
- Restricted Securities: Reg D tokens have holding periods (typically 12 months)
- Limited Liquidity: Cannot freely trade like registered securities
- Investor Restrictions: Must verify accreditation
- No Public Marketing: 506(b) prohibits general advertising
Examples in Crypto
- Tokenized treasury products (many use Reg D)
- Security token offerings
- RWA platforms offering investment products
- Private fund tokens