Regulation D (Reg D)

Regulation D (Reg D) is the set of SEC rules that lets a company sell securities in the U.S. without registering the offering, as long as it meets the conditions of Rule 504 or Rule 506 (17 CFR 230.504 and 230.506). It applies in the same way when the security is issued as a token: under the Commission's interpretation of March 17, 2026 (Release No. 33-11412, section III.E), the onchain format does not change a security's nature. If the token represents stock, debt or another instrument listed in the statutory definition of security, it is one; if not, it is analyzed under the Howey Test as a possible investment contract.

Rule 504. Up to $10 million, minus what was sold in the previous 12 months and during the offering (230.504(b)(2)). It is not available to issuers that already report to the SEC, investment companies or blank check companies (230.504(a)).

Rule 506(b). It bans general solicitation (230.502(c)) and allows no more than 35 purchasers in any 90-day period (230.506(b)(2)(i)); accredited investors do not count toward that limit (230.501(e)). Each non-accredited purchaser must be able to evaluate the risks, alone or with a representative (230.506(b)(2)(ii)), and receive the information required by 230.502(b).

Rule 506(c). It allows advertising, but every purchaser must be an accredited investor and the issuer must take "reasonable steps" to verify it (230.506(c)(2)). The rule lists non-exclusive methods: IRS forms for the last two years, net worth documents from the last three months, or written confirmation from a broker-dealer, an SEC-registered investment adviser, an attorney or a CPA. In its no-action letter to Latham & Watkins (March 12, 2025), the SEC staff accepts reliance on a minimum investment of $200,000 (individuals) or $1,000,000 (entities), together with a written representation of accredited status and that the investment is not financed by a third party; CFIs (formerly C&DIs) 256.35 and 256.36 set out the general high-minimum-investment approach without fixing amounts. CFI 260.40 (July 21, 2026) allows those representations to be given through a digital attestation within the tokenized security, provided records are kept. This is a staff view, not binding: verification remains a case-by-case judgment.

Form D and bad actors. Form D is filed on EDGAR within 15 calendar days of the first sale and amended every year while the offering remains open (230.503). According to the staff (CFI 257.07), failing to file does not by itself cost the exemption, but a court injunction for breaching that duty bars the use of Rules 504 and 506 (230.507). The exemption is also unavailable if any disqualifying event under 230.506(d) applies.

Restricted securities. Securities bought under Reg D are restricted securities (230.502(d) and 230.144(a)(3)), except in certain Rule 504 offerings registered or exempt at the state level (230.504(b)(1)): to resell them under Rule 144 they must be held for 6 months if the issuer reports to the SEC and 1 year if it does not (230.144(d)(1)). Rule 506 offerings are covered securities: states cannot require registration, although they can require notice filings and fees (15 U.S.C. 77r(b)(4)(F) and (c)(2)(A)). More in asset tokenization in the U.S. and real estate tokenization in the U.S.; alternatives: Regulation A+ and Regulation Crowdfunding.

Official sources: 17 CFR 230.506; 17 CFR 230.504; 17 CFR 230.503; 17 CFR 230.144; no-action letter to Latham & Watkins; SEC CFIs (formerly C&DIs); Release No. 33-11412.

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