Qualified and accredited investors: who can buy what

An accredited investor is a US regulatory category for individuals or institutions allowed to buy securities that aren't registered with the SEC. The simple version: $1 million in net worth excluding primary residence, or $200,000 in annual income ($300,000 jointly) for the last two years.

Institutions need $5 million in assets. The "qualified purchaser" tier sits above that: $5 million in investments for individuals or family companies, $25 million for institutions.

These labels gate everything that isn't a public stock, mutual fund, or ETF. Hedge funds, private equity, venture capital, private credit, structured notes, crypto yield products: every one of them requires the buyer to clear one of these definitions before the fund manager can legally take the money.

Status is the gate.

How it actually works

Every securities offering in the US has to either register with the SEC or fit one of the available exemptions. Registered offerings (an IPO, a public bond issue) are open to anyone. Exempt offerings are restricted, and the most common exemption is Regulation D, Rule 506.

Rule 506 has two flavors. Under 506(b), a fund can raise from up to 35 non-accredited investors plus an unlimited number of accredited investors, with no general solicitation allowed. Under 506(c), the fund can advertise publicly but every investor must be verified accredited, with documentation.

Most institutional crypto and RWA products use 506(c) because it lets them market openly.

Above accredited sits the qualified purchaser bar. Section 3(c)(7) of the Investment Company Act lets a fund accept an unlimited number of investors with no 100-investor cap, as long as every single one of them qualifies as a qualified purchaser, which is what gives multi-billion-dollar private vehicles their open-ended structure. Section 3(c)(1) caps it at 100 accredited investors.

Funds that want to scale past 100 LPs without registering pick 3(c)(7) and accept the higher bar.

Other jurisdictions use parallel labels with their own thresholds. The EU and UK rely on MiFID II's "professional client" definition (€500,000 in portfolio, financial-sector experience, large transactions, with two of three required). Singapore uses "accredited investor" with a S$2 million net financial assets test, and Cayman has "sophisticated investor."

Thresholds vary, documentation procedures vary, labels vary, but the underlying principle is the same in every jurisdiction: regulators ration access to lightly-disclosed private offerings by the investor's apparent capacity to absorb loss without ruin.

Why it matters

Private securities sit under these exemptions. That's why most institutional crypto products are gated.

A protocol promising stablecoin returns sourced from real-world asset lending sells fund interests under one of these exemptions, meaning the buyer's got to clear identity, sanctions, and accreditation checks before the deposit ever reaches the vault contract. The verification is what the gate checks.

Gating decisions shape the product itself. A fund that wants 50 LPs and a $5 million minimum can run as 3(c)(1) with accredited investors. One that wants 500 LPs and global distribution will run as 3(c)(7) and accept only qualified purchasers.

Pick the gate and the rest follows: investor list shapes structure, structure shapes marketing, marketing shapes who actually shows up.

On-chain, these checks now run at the smart contract layer. ERC-3643 encodes investor identity and compliance status into the token itself, so a transfer to a non-qualified wallet simply reverts. The KYC provider attests, the contract enforces, the investor either passes or doesn't.

Where this shows up in Rekord

Rekord's deposit-facing fund is gated to verified accredited and qualified investors. Wallet-level KYC and accreditation checks happen before any deposit can settle, with the verification enforced by the vault contract itself.

For the mechanics of how that verification gets implemented on-chain, see KYC, AML, and why institutional capital is gated. For why the deposit-facing entity sits separately from the deployment-facing one, see The dual-fund structure: why institutional RWA protocols use two entities.