Conclusion

Currently, most projects offering assets on the blockchain either choose to use Regulation D Rule 506(c) to target accredited investors in the U.S. or focus on non-U.S. investors using exemptions like Regulation S. Another common practice is to set up a separate fund in the form of a Special Purpose Vehicle (SPV) when offering assets on-chain.

Setting up an SPV has several advantages:

• Bankruptcy Protection: An SPV keeps the assets safe from the risk of the parent company going bankrupt, providing strong protection for investors.

• Asset Separation: They separate specific assets or cash flows from the parent company, reducing the impact of any risks tied to the parent company’s other business activities.

• Better Credit Rating: SPVs can often get a higher credit rating than the parent company, making the securities they issue more appealing to investors.

• Turning Assets into Cash: SPVs help turn less liquid assets into easily tradable securities, giving the parent company more financial flexibility.

The next section will dive deeper into Special Purpose Vehicles (SPVs), explaining how they work and why they are useful when offering assets on the blockchain.