Regulation D
A U.S. securities law exemption letting companies raise capital by selling unregistered securities, typically to accredited investors, without a full public offering.
Regulation D is a set of rules under U.S. securities law providing an exemption from the normal requirement to register a securities offering with the Securities and Exchange Commission, letting a company raise capital by selling unregistered securities — commonly to accredited investors (see Kaavon's "Accredited Investor" glossary definition) — subject to specific conditions on how the offering is marketed and who may participate. Many crypto token sales that are deemed to involve a security, often based on a Howey Test (see Kaavon's "Howey Test" glossary definition) analysis, have relied on a Regulation D exemption to raise funds from investors without a full public registration process.
A Regulation D offering typically comes with restrictions, including limits on general solicitation or advertising depending on the specific exemption used, and resale restrictions that can make tokens or securities sold under it illiquid for a holding period. Because Regulation D exemptions are specific to U.S. securities law, a token sale relying on it for U.S. investors is often paired with a separate exemption, such as Regulation S (see Kaavon's "Regulation S" glossary definition), to cover sales to investors outside the United States.
Examples
- A crypto project treating its token sale as a securities offering might rely on Regulation D to sell to accredited U.S. investors without registering the offering with the SEC.
- Tokens sold under a Regulation D exemption are typically subject to resale restrictions, meaning early investors often can't freely trade them for a specified holding period.