How Does Token Fractionalization Affect the Accredited Investor Requirement?
Token fractionalization, the division of a token into smaller units, does not negate the accredited investor requirement for the underlying security. If the original asset is a security sold under an exemption (like Reg D) that requires accredited investors, all fractional parts of that token must still be sold only to accredited investors until the transfer restrictions lapse.
Glossar
Fractionalization
Process ⎊ Fractionalization is the procedural mechanism by which a single, high-value asset, often a non-fungible token (NFT) or a large block of cryptocurrency, is mathematically divided into multiple, smaller, and typically fungible tokens.
Accredited Investors
Qualification ⎊ Accredited investor status, within the context of cryptocurrency, options trading, and financial derivatives, denotes an individual or entity meeting specific socioeconomic thresholds established by regulatory bodies like the SEC, designed to assess financial sophistication and risk tolerance.
Accredited Investor
Investor ⎊ The designation of an individual or entity meeting specific financial thresholds established by securities regulations, primarily intended to qualify for exemptions from certain registration and disclosure requirements in private offerings.