What Is the Purpose of an ‘Accredited Investor’ Requirement in a Security Token Sale?

The accredited investor requirement, often used in Regulation D offerings, is designed to protect less sophisticated investors from high-risk investments. Accredited investors, due to their higher income or net worth, are presumed to have the financial knowledge and capacity to absorb potential losses.

By limiting the sale to this group, the issuer can avoid the costly and time-consuming process of full public registration.