The two Regulation D rules trade marketing freedom against investor flexibility. Rule 506(b) lets you include a limited number of non-accredited investors and accept self-certified accreditation - but you cannot advertise. Rule 506(c) lets you market publicly and raise without limit - but only from accredited investors you actively verify. Both allow unlimited raise amounts and both create restricted securities. The right one depends on whether you need public marketing or want to include non-accredited investors you already know.

The core trade-off

506(b) is the quiet, flexible rule: no public advertising, but you may admit up to 35 non-accredited (sophisticated) investors alongside unlimited accredited ones, and investors can self-certify their status.

506(c) is the loud, stricter rule: advertise freely, but accredited investors only, and you must verify each one. You are trading who you can include for how you can reach them.

Side by side

The clearest differences are marketing, investor type, and verification. 506(b) forbids general solicitation but permits some non-accredited investors with self-certification. 506(c) permits general solicitation but restricts to verified accredited investors. Everything else - unlimited raise, Form D filing, restricted securities with a resale holding period - is the same.

When to choose 506(b)

Pick 506(b) when you are raising quietly from your own network and want to include a few non-accredited people you know and trust. Because you cannot advertise, 506(b) suits sponsors with an existing investor base they can approach privately.

The flexibility on non-accredited investors is its main draw - but the "no advertising" rule is strict, and even a public pitch can jeopardize the exemption.

When to choose 506(c)

Pick 506(c) when you want to market the offering openly to find accredited investors you do not already know. The ability to advertise is powerful for reaching new capital, and it is the standard choice for tokenized raises that lean on public awareness.

The price is mandatory verification and accredited-only investors, which narrows who can participate.

The practical rule of thumb

If your raise depends on publicly promoting it, you need 506(c) and must verify. If you want to include non-accredited investors from your circle and will not advertise, 506(b) fits. Many tokenized issuers choose 506(c) for the marketing freedom, accepting the verification burden. Either way, these are securities overseen by the SEC - see who regulates RWAs - so confirm your choice with counsel before you raise.

Where to go next

• Next: Reg S - offering tokens to non-US investors.
• The regulators: who regulates RWAs.
• Glossary: general solicitation.

Sources: U.S. SEC (sec.gov), as of 2026.