On-chain stock issuance — Reg D 506(c), transfer agent + tokenization, 24/7 trading, perpetual compliance.
"The offering gateway — issuer structures Reg D 506(c) with Securitize and files SEC Form D."
Issuer (private corporation, real estate fund, alternative asset manager) partners with Securitize to structure a Regulation D 506(c) equity offering. Securitize is an SEC-registered transfer agent AND an Alternative Trading System (ATS) operator — dual status enables general solicitation while enforcing accredited investor verification. Issuer files SEC Form D documenting offering terms: number of shares, authorized issuance amount, investor cap, dividend policy, liquidation rights. Securitize acts as the compliance architect — ensuring offering documents comply with federal securities law (D8 licensing) and consumer protection mandates (D14). This is the heaviest compliance path in the Issuance rail because it carries perpetual transfer agent obligations. Policy-enforced at L5.
"The investor eligibility gate — all 506(c) investors must be verified accredited via third-party evidence."
Under Reg D 506(c), general solicitation is allowed BUT every investor must be verified as accredited. Securitize conducts third-party accreditation verification: letter from CPA confirming net worth >$1M (excluding primary residence) or income >$200K/yr, broker-dealer statement, attorney letter, or SEC accredited investor list confirmation. This is the equity-specific firewall — Securitize does not mint tokens to non-accredited addresses. D1 (identity and accreditation status) and D8 (transfer agent licensing authority) apply. Policy-enforced at L4–L5.
"The subscription gateway — investor signs stock purchase agreement and source-of-funds evidence passes AML/CFT screening."
Investor executes stock subscription agreement (company-specific stock purchase agreement with equity-specific rights, liquidation preferences, dividend schedules). Investor provides source-of-funds documentation — evidence that investment capital is clean and compliant with AML/CFT typologies. Securitize screens investor against OFAC, FinCEN lists, and sanctions databases (D2). Suitability assessment conducted: investment amount cannot exceed limits set by issuer (often 10% of annual income for non-institutional investors). This is the document boundary — the bridge between traditional equity law and on-chain settlement. D1 (identity), D2 (sanctions screening), D8 (transfer agent oversight), and D9 (prudential suitability) are active. Policy-enforced.
"The issuance boundary — equity tokens are minted and registered in DS Protocol compliance registry. The smart contract IS the cap table."
Equity tokens minted natively on settlement chain (Ethereum, Avalanche, or Polygon). Securitize's DS Protocol (on-chain compliance protocol) registers the minted tokens in an immutable cap table registry — mapping token ID to investor address, share count, liquidation preference rank, dividend rights, and transfer restrictions. DS Protocol enforces whitelist at mint time — only addresses pre-approved by Securitize and registered in the compliance oracle receive tokens. This is the compliance heavyweight moment: the smart contract becomes the company's cap table. Every token IS a stock certificate; the contract maintains investor identities, ownership percentages, and liquidation waterfall. L3 Execution (mint contract with DS Protocol whitelist oracle) and L2 Consensus are lit. Enforcement is code at the application boundary.
"The secondary market gate — EVERY token transfer passes through Securitize's perpetual compliance oracle. This checkpoint NEVER turns off."
This is the center of gravity for equity tokenization. Securitize's DS Protocol enforces a perpetual transfer agent gate on EVERY secondary market transfer — the gate NEVER turns off, for the life of the company. Before any token transfer executes on-chain, the DS Protocol oracle checks: (a) Is the sender accredited? (b) Is the receiver accredited? (c) Has the sender held tokens for the required holding period (typically 6 months for Reg D)? (d) Will the transfer exceed the company's maximum shareholder count (relevant for Reg D limited to 500 beneficial owners)? (e) Are sender and receiver addresses in jurisdictions permitted by the offering document? If ALL checks pass, the transfer is whitelisted in the smart contract and executes. If ANY check fails, the transaction reverts. This is programmable transfer restrictions — D8 (transfer agent perpetual authority), D14 (consumer protection via accreditation gates), and D16 (programmable compliance automation) are active. Code-enforced at L3–L4. This checkpoint is the binding difference between tokenized equity and other asset classes — it is the non-negotiable transfer agent obligation that persists beyond issuance into secondary trading, redemptions, and liquidations.
"The investor's equity position — tokens in wallet, transfer restricted by DS Protocol oracle for perpetuity."
Equity tokens arrive in the investor's wallet. Only addresses that have passed Securitize's dual-gate (accreditation + AML) and remain accredited can hold or transfer equity tokens — the transfer restriction is code-enforced in DS Protocol and applies to ALL transfers for all time. Investor can initiate secondary sales, but the transfer agent gate (Step 5) must approve before settlement. 24/7 trading capability (vs NYSE 6.5hrs/day) — Securitize's ATS enables continuous settlement and atomic DVP with USDC or stablecoin proceeds. Securitize perpetually maintains the cap table: investor identities are immutably recorded on-chain, liquidation preference rank is encoded, dividend rights are trackable. Annual recordkeeping and tax reporting obligations (D11 recordkeeping, D12 tax filings) apply — Securitize provides investor tax statements and cap table reports. This is the most regulated path in the Issuance rail — the transfer agent obligation is permanent and the compliance oracle touches every single transaction.
Resolved 6 steps across 1 chain(s). 0 threshold(s) triggered. Frameworks: Common Reporting Standard / FATCA.
Coverage notes: 5 disclosed gap(s).