Requirements for Exemption Under Regulation A
In the United States, state and federal law generally require that securities (including, in many cases, virtual tokens) be registered with the government before they can be offered or sold.
However, there are some exemptions from this registration requirement. Regulation A provides two such exemptions for U.S-based companies.
Under Regulation A’s Tier 1, a company can offer and sell up to $20 million of its virtual tokens during any 12-month period. It must provide each prospective investor with a detailed offering circular that meets certain requirements, and it may not accept money from investors until its offering circular has been approved by the SEC.
Under Tier 2, a company can sell up to $50 million of its tokens during a 12-month period. As under Tier 1, the company must provide an offering circular to prospective investors, but the circular under Tier 2 is subject to additional requirements. After the sale, the issuer in a Tier 2 offering must file regular reports with the SEC.
Tier 1 offerings must still comply with any applicable state securities laws in each state where the token is offered. However, Tier 2 offerings are exempt from any state registration requirements.
Tokens sold under Regulation A are not subject to resale restrictions, unlike those sold under Regulation D.
Expert Assistance for Token Sales Under Regulation A
Dilendorf & Khurdayan offers expert assistance in planning, preparing for, and implementing an offering of virtual tokens under Regulation A.
Our services include:
- Analyzing our clients’ plans and advising them on the optimal exemption for their registration, whether under Regulation A, Regulation D, or otherwise
- Drafting, reviewing, and filing offering circulars that satisfy the requirements of Regulation A
- Helping clients collect information from investors to comply with their Anti-Money Laundering and Know Your Customer obligations
- Assisting clients in preparing and filing any post-offering reports required by the SEC
Contact Us to Learn More About Our Regulation A Services for Token Sales
Send us an email or call 212.457.9797 to schedule a consultation at our Manhattan office.