Lexicon of securities, tokenization & structuring.

A

Accredited Investor 17 CFR § 230.501(a)

Individual or entity meeting one of the categories in Rule 501(a): individual income $200K+ / joint $300K+ for two years; net worth $1M+ excluding primary residence; certain professional certifications (Series 7/65/82); knowledgeable employees of the issuer; family clients of an accredited family office; and various entity categories with $5M+ in assets or all-accredited equity holders. Cross-ref: Rule 506(b), Rule 506(c), Verification of Accredited Investor Status.

ADGM — Abu Dhabi Global Market UAE Federal Decree No. 15 of 2013

Financial free zone in Abu Dhabi with an independent English-common-law jurisdiction and its own regulator (FSRA). Issued the first comprehensive crypto-asset framework in the region (2018) and now hosts a substantial tokenized-asset industry. See also: DIFC, MAS, FCA in Jurisdictions.

AML — Anti-Money Laundering Bank Secrecy Act, 31 U.S.C. § 5311 et seq.

Regulatory framework requiring financial institutions to prevent, detect, and report money-laundering activity. Includes customer identification (CIP), sanctions screening, suspicious activity reports (SARs), currency transaction reports (CTRs), and record-keeping obligations under 31 CFR Chapter X. See also: KYC, OFAC, FinCEN, Travel Rule.

Anti-Fraud Rule (Rule 10b-5) 17 CFR § 240.10b-5

Broad anti-fraud provision under the Exchange Act prohibiting material misstatements or omissions in connection with the purchase or sale of securities. Applies to private placements as well as public offerings. Even a fully-exempt offering can create liability under this rule for misleading disclosure.

Assignment (of Interest) Operating Agreement, general contract law

Transfer of an owner's economic rights (right to distributions) in an entity without transfer of governance rights. Distinct from a full membership transfer, which typically requires Manager consent and admits the transferee as a Member.

B

Bad Actor 17 CFR § 230.506(d)

Person subject to a specified disqualifying event under Rule 506(d) since September 23, 2013. Presence of any bad-actor covered person disqualifies the issuer from relying on the Rule 506 exemption unless a waiver is obtained. Diligence on all covered persons (directors, officers, promoters, 20%+ owners, compensated solicitors) is mandatory.

Bankruptcy Remoteness Structured finance concept

Structural feature of an SPV that prevents its assets from being consolidated with a sponsor's estate if the sponsor becomes insolvent. Achieved through separateness covenants, independent director requirements, limitations on incurring debt, and true-sale of assets to the SPV. Critical in securitization structures.

Beneficial Owner 31 CFR § 1010.380(d)

Under FinCEN's Corporate Transparency Act rules: any individual who directly or indirectly (i) exercises substantial control over a reporting entity or (ii) owns 25% or more of the entity's ownership interests. Per FinCEN's interim final rule of 26 March 2025, "reporting company" was redefined to cover only foreign entities registered to do business in the United States. Domestic entities are exempt. Historical BOI filings by domestic entities are not required to be updated.

Blue Sky Laws State securities laws, generally

State-level securities regulations that supplement federal law. Named for a 1917 case describing scam promoters selling "so many feet of blue sky." For Rule 506 offerings, states are largely preempted from substantive review but retain the right to require notice filings and fees. See Blue Sky Coverage.

BOI — Beneficial Ownership Information 31 CFR § 1010.380; FinCEN interim final rule, 26 March 2025

Report filed with FinCEN under the Corporate Transparency Act identifying beneficial owners and company applicants for a reporting entity. Following the 26 March 2025 interim final rule, the BOI reporting obligation applies only to foreign entities registered to do business in the United States. Domestic (US-formed) entities are no longer required to file BOI reports. Foreign reporting companies must file within 30 days of first registration or of any change in reported beneficial ownership. Civil penalty inflation-adjusted (approx. $591–$606/day as of 2025).

Broker-Dealer 15 U.S.C. § 78c(a)(4), (5)

Person engaged in the business of effecting transactions in securities for the account of others (broker) or for the person's own account (dealer). Requires SEC registration and FINRA membership. See Rule 3a4-1 for the "issuer-associated person" safe harbor from BD registration.

C

Cap Table Corporate governance

Capitalization table — a record of all issued equity in a company, showing each holder's amount, class, price paid, and terms. For tokenized securities, the on-chain state may serve as the cap table of record but the underlying legal source of truth remains the entity's stock ledger or LLC membership register.

Carried Interest ("Promote") IRC § 1061; Fund LPA

Sponsor's share of investment profits above a defined preferred return hurdle. Typically 20% above an 8% preferred return with catch-up. Recharacterized as short-term ordinary income by 2017 TCJA if the underlying gain is on a holding of 3 years or less; long-term capital gains treatment retained for longer holds.

Certified Public Accountant (CPA) attestation AICPA Attestation Standards

Formal written statement by a CPA regarding financial or non-financial subject matter. In the reserve-attestation context (stablecoins, tokenized T-bills), monthly CPA attestation is a common regulatory requirement.

CFR — Code of Federal Regulations 1 CFR 1.1 et seq.

Codified rules of federal executive-branch agencies. Cited by title, part, section (e.g., "17 CFR § 230.506(c)" is Title 17, Part 230, Section 506, paragraph c). Full text at ecfr.gov.

CMBS — Commercial Mortgage-Backed Securities Regulation AB, 17 CFR Part 229 Subpart 229.1100

Pool of commercial mortgages packaged into a trust that issues bonds with progressively lower priority claims (senior / mezzanine / preferred equity tranches). Standard securitization structure for institutional CRE debt.

Common Reporting Standard (CRS) OECD standard, 2014

International automatic-exchange-of-information framework for financial-account data. Adopted by 100+ jurisdictions. Foreign financial institutions report on their US-account holders under the parallel FATCA regime; CRS is the multilateral analog for non-US-to-non-US reporting.

Corporate Transparency Act (CTA) 31 U.S.C. § 5336; FinCEN interim final rule, 26 March 2025

Enacted 2020. As originally implemented (effective 1 January 2024), it required most US-formed and foreign-registered entities to file BOI reports with FinCEN. Following the 26 March 2025 interim final rule, FinCEN redefined "reporting company" to cover only foreign entities registered to do business in the US. All entities created in the United States are now exempt. See BOI. Consult current FinCEN guidance for any additional exemption or scope change before relying on this summary.

Custody Rule 17 CFR § 275.206(4)-2

Investment Advisers Act rule requiring registered investment advisers with custody of client assets to use a "qualified custodian" and to provide annual surprise-examination audits (or an equivalent). Reformed 2023 to expand to crypto-assets; enforcement guidance continues to evolve.

D

DAO — Decentralized Autonomous Organization WY Stat. § 17-31-101 et seq. (WY DAO LLC Act)

Organization coordinated primarily through smart contracts on a blockchain. Wyoming (2021) and Utah (2023) permit registration as a DAO LLC. Federal law does not recognize a DAO as a distinct entity type — federal tax and securities treatment depends on the underlying activity, not the DAO label.

DID — Decentralized Identifier W3C DID Core Recommendation, 2022

W3C-standardized identifier format for cryptographically-verifiable digital identities not tied to a central registry. Foundation for on-chain identity systems used by ERC-3643 (ONCHAINID), Circle Verite, and similar frameworks.

DIFC — Dubai International Financial Centre DIFC Regulatory Law 2004, DIFC Laws

Dubai financial free zone with independent English-common-law jurisdiction and its own regulator (DFSA). Tokenized-securities activity permitted under a specific "investment token" regime introduced 2021. See Jurisdictions.

Distribution Waterfall Fund LPA / LLC OpAgmt

Sequence of cash-flow distributions between investors and sponsor. Standard American waterfall: return of capital → preferred return → catch-up → 80/20 split. European waterfall waits for full fund payback before sponsor promote begins. Deal-by-deal ("American") is more sponsor-friendly.

DST — Delaware Statutory Trust 12 Del. C. § 3801 et seq.

Pass-through vehicle designed for 1031-exchange investors. Beneficial interests treated as direct real-property ownership for tax purposes. IRS Rev. Rul. 2004-86 establishes the "seven deadly sins" of prohibited actions (no reinvestment, no new debt, no new investors, etc.).

E

eCFR — Electronic Code of Federal Regulations Government Publishing Office

Authoritative machine-readable current CFR at ecfr.gov. Includes amendment history and near-real-time updates. The Legal Ops System corpus layer pulls citations from this API.

EDGAR — Electronic Data Gathering, Analysis, and Retrieval SEC filing system

SEC's public filing repository at sec.gov/edgar. Every registered securities filing since 1993 is here. Full-text search at efts.sec.gov. Data endpoint at data.sec.gov.

Effective Date Contract law, generally

Date on which a contract or offering becomes legally operative. For a securities offering, may differ from filing date if the offering includes a delayed-effective provision or requires regulatory qualification (e.g., Reg A+ qualification by SEC).

ERC-1400 Ethereum Improvement Proposal, non-final

Standard for security tokens with partitioning, transfer restrictions, forced transfers, operator control, and document management. Widely implemented despite non-final EIP status. Used by Polymath, tokeny, and various institutional platforms.

ERC-3643 (T-REX) Ethereum EIP-3643

Permissioned-token standard purpose-built for regulated securities. Requires on-chain identity (ONCHAINID) with verifiable claims for every holder. Every transfer is validated against configurable compliance modules before execution. Now an official EIP; primary standard for institutional tokenized securities.

ERISA — Employee Retirement Income Security Act of 1974 29 U.S.C. § 1001 et seq.

Federal statute regulating pension plans and other employee benefit arrangements. Relevant to private funds through the "Plan Assets" regulation (DOL Reg 2510.3-101), which can treat fund assets as plan assets if benefit plan investor participation exceeds 25% and no exception applies (VCOC, REOC, publicly-offered).

F

FATF Travel Rule FATF Recommendation 16 (Revised 2019)

International standard requiring originator and beneficiary information to accompany cross-border wire transfers (and, increasingly, virtual-asset transfers). FinCEN implementation for crypto pending; multiple jurisdictions (Singapore MAS, EU MiCA, Swiss FINMA) already enforce.

FCA — Financial Conduct Authority (UK) Financial Services and Markets Act 2000

UK conduct regulator for financial services. Cryptoasset regulation under FSMA Order 2001 (as amended); financial promotion rules under COBS 4 apply to crypto marketing. See Jurisdictions.

FinCEN — Financial Crimes Enforcement Network Treasury bureau, 31 CFR Chapter X

US Treasury bureau administering Bank Secrecy Act rules. Regulates money-service businesses (including money transmitters and crypto exchanges), receives SAR/CTR filings, and administers the Corporate Transparency Act BOI reporting regime.

Form D 17 CFR § 230.503; 17 CFR § 239.500

SEC notice filing required within 15 days after first sale in any Regulation D offering. Amended annually while the offering remains open. Filed electronically via EDGAR. Non-filing can jeopardize the exemption.

G

General Solicitation 17 CFR § 230.502(c); Rule 506(c)

Marketing to persons with whom the issuer has no pre-existing substantive relationship — includes public advertising, mass emails, social media, and open events. Historically prohibited in private placements; permitted under Rule 506(c) provided all purchasers are verified accredited investors.

GENIUS Act Pub. L. 119-27, 139 Stat. 419 (enacted 18 July 2025)

Guiding and Establishing National Innovation for U.S. Stablecoins Act — first federal statutory framework for payment stablecoins. Requires 1:1 reserve backing, monthly attestations, dual state/federal chartering pathway, and priority for token holders in issuer insolvency. See brief.

GLEIF — Global Legal Entity Identifier Foundation ISO 17442

Non-profit that oversees the LEI (Legal Entity Identifier) system — 20-character alphanumeric IDs uniquely identifying legal entities globally. Free public directory at gleif.org. Used by the Legal Ops System DD layer for entity verification.

Governing Law Clause Contract boilerplate

Contract provision specifying which jurisdiction's substantive law applies. Different from a forum-selection clause (which court). Typical: Delaware for corporate structuring; New York for financial contracts; sponsor's principal-office state for operating vehicles.

H

Howey Test SEC v. W.J. Howey Co., 328 U.S. 293 (1946)

Supreme Court test defining an "investment contract" (and thus a security): (1) investment of money (2) in a common enterprise (3) with expectation of profit (4) derived from the efforts of others. Applied to tokens by SEC in DAO Report (2017) and multiple enforcement actions since.

I

IAPD — Investment Adviser Public Disclosure SEC / NASAA joint database

Public database of registered investment advisers, exempt reporting advisers, and their representatives. Backend of adviserinfo.sec.gov. Includes ADV filings, disciplinary history, and current registrations.

ICA — Investment Company Act of 1940 15 U.S.C. § 80a-1 et seq.

Federal statute regulating pooled investment vehicles. Private funds typically rely on Section 3(c)(1) (up to 100 beneficial owners, all accredited-not-required) or 3(c)(7) (unlimited qualified purchasers) exclusions. Failure to qualify = full 40-Act registration = death for a private fund.

Indemnification Contract, boilerplate

Contractual promise by one party to defend and hold harmless another party against specified losses. Distinct from insurance (which involves premium and a third-party insurer). Standard in fund docs, MSAs, and management agreements; often carved-back for gross negligence and willful misconduct.

Integration Doctrine 17 CFR § 230.152

SEC rule for determining whether multiple offerings should be aggregated. As revised 2020, provides safe harbors for concurrent offerings separated by 30 days or by qualifying structural differences. Critical for issuers running concurrent Reg D + Reg S or Reg D + Reg A+ programs.

K

K-1 (Schedule K-1) Form 1065, IRC § 6031

Tax form issued by a partnership to each partner showing their distributive share of income, deductions, credits, and other items. Investors in partnership-taxed private funds and SPVs receive K-1s annually, typically 90+ days after fiscal year end. Late K-1 delivery is one of the most common investor complaints in private-fund practice.

KYC — Know Your Customer 31 CFR § 1010.220 (CIP); 31 CFR § 1010.230 (BOI-lite)

Customer-identification and due-diligence process required of financial institutions. Involves collecting government ID, verifying identity, screening against sanctions lists, and (for entities) understanding ownership structure. See also AML, BOI.

L

LEI — Legal Entity Identifier ISO 17442

20-character alphanumeric code identifying a legal entity uniquely worldwide. Issued by GLEIF-accredited Local Operating Units (LOUs). Required for entities transacting in various regulated financial products; useful for RWA structures for counterparty verification.

LLC — Limited Liability Company State law (WY Stat. § 17-29; DE 6 Del. C. § 18)

US business entity combining limited liability (like a corporation) with pass-through taxation (like a partnership) and flexible governance. Wyoming and Delaware are dominant formation jurisdictions. Default federal tax classification: partnership (multi-member) or disregarded (single-member); other elections available.

LPA — Limited Partnership Agreement Fund governance document

Governance agreement between the General Partner (sponsor) and Limited Partners (investors) in a limited partnership. Analog of the LLC Operating Agreement. Standard NVCA / ILPA templates provide industry-standard starting points.

M

Manager Wyo. Stat. § 17-29-407 (WY); 6 Del. C. § 18-402 (DE)

Person or entity vested with management authority in a manager-managed LLC. May be a Member or a non-Member. Owes fiduciary duties to the LLC and to the Members under the operating agreement and applicable law.

MiCA — Markets in Crypto-Assets Regulation EU Regulation 2023/1114

EU crypto-asset regulatory framework. Full effect from December 30, 2024. Establishes licensing regime for crypto-asset service providers (CASPs), rules for asset-referenced tokens (ARTs) and e-money tokens (EMTs), and market-abuse provisions. Passporting across EU member states.

Money Transmitter 31 CFR § 1010.100(ff)(5)

FinCEN-defined "money service business" that accepts and transmits funds. Requires federal MSB registration and (in nearly every state) a state money-transmitter license. Cryptocurrency exchange activity almost always triggers MSB status.

N

NASAA — North American Securities Administrators Association

Association of state and provincial securities regulators in the US, Canada, and Mexico. Operates the Electronic Filing Depository (EFD) at efdnasaa.org, the central portal for state Blue Sky notice filings.

NVCA — National Venture Capital Association NVCA Model Documents

Industry association whose free-download model documents (Series A term sheet, SPA, IRA, ROFR, Voting Agmt, Charter, Legal Opinions) are the industry-standard starting point for US venture financings.

O

OFAC — Office of Foreign Assets Control 31 CFR § 501 et seq.

Treasury office administering US sanctions programs. Publishes the Specially Designated Nationals (SDN) list of prohibited counterparties. All US persons must screen counterparties against the SDN list; violations carry strict liability. Consolidated Screening List aggregates SDN + BIS + State sanctions.

ONCHAINID ERC-734 / ERC-735; Tokeny

On-chain identity contract used in ERC-3643 systems. Holds verifiable claims (accredited-investor status, KYC completion, jurisdictional residence) issued by claim issuers. Required for every holder of an ERC-3643 permissioned token.

Operating Agreement Wyo. Stat. § 17-29-110; 6 Del. C. § 18-101(9)

Governance contract among LLC Members. Not filed with the state (unlike the Articles of Organization). Governs management structure, distributions, transfers, dissolution, and every other operational rule of the LLC.

P

PPM — Private Placement Memorandum Industry practice; Rule 10b-5 anti-fraud

Disclosure document delivered to prospective investors in a private securities offering. Not statutorily required in all cases but nearly universal practice as protection against Rule 10b-5 liability. Typical sections: cover / summary / risk factors / use of proceeds / business / management / conflicts / securities / bad-actor / tax / ERISA / additional info.

Preferred Return Fund / SPV OpAgmt

Threshold return that must be paid to investors before the sponsor participates in profits. Typical: 8% cumulative preferred, with catch-up. Deal-specific; some deals have no preferred (pure pro-rata splits); some have staged preferreds tied to hold period.

Promote Real estate sponsor economics

Sponsor's share of profits above the preferred-return hurdle. Real-estate term of art; roughly equivalent to "carried interest" in fund structures. Typical: 20% promote above 8% preferred; sometimes structured with multiple tiers ("waterfalls") tied to IRR hurdles.

Q

Qualified Custodian 17 CFR § 275.206(4)-2(d)(6)

Custody Rule definition: bank, savings association, registered broker-dealer, registered futures commission merchant, or certain foreign financial institutions. Registered investment advisers with custody of client assets generally must use a qualified custodian.

Qualified Purchaser 15 U.S.C. § 80a-2(a)(51); 17 CFR § 270.2a51-1

Individual owning $5M+ in investments, or entity owning $25M+ in investments on discretionary basis. Higher threshold than Accredited Investor. Investors in a Section 3(c)(7) fund must all be qualified purchasers.

Quiet Period Securities Act Section 5; Rule 168

Restriction on public communications by an issuer around the filing of a registration statement. Rule 163B (2020) provides testing-the-waters accommodation for all issuers. In private-placement context, relevant primarily where an issuer plans to transition to a registered offering.

R

Reg D — Regulation D 17 CFR § 230.500-508

Set of SEC rules providing safe-harbor exemptions from Securities Act registration for private placements. Most common: Rule 506(b) (no general solicitation; up to 35 sophisticated non-accredited); Rule 506(c) (general solicitation allowed; all accredited, all verified). Also Rule 504 (small offerings up to $10M).

Rescission Securities Act Section 12(a); state law

Right of an investor to unwind a purchase and recover consideration paid, typically for a violation of the securities laws in connection with the sale. Federal statutory right for unregistered offerings that don't qualify for an exemption. Also available as a common-law remedy for misrepresentation.

Restricted Securities 17 CFR § 230.144(a)(3)

Securities acquired in a private placement (i.e., not registered under the Securities Act). Cannot be freely resold; typically subject to a 1-year holding period before Rule 144 resale is available, and even then subject to volume + manner-of-sale limits for affiliates.

Rule 144 17 CFR § 230.144

Safe-harbor exemption permitting resale of restricted securities after a holding period (6 months for reporting-company securities, 1 year for others) and subject to various conditions including current-public-information and (for affiliates) volume + manner-of-sale limits.

Rule 144A 17 CFR § 230.144A

Safe-harbor permitting private resales of restricted securities to qualified institutional buyers (QIBs — entities owning $100M+ in securities). Foundation of the institutional private-placement market. Distinct from public resale under Rule 144.

S

SAFT — Simple Agreement for Future Tokens Cooley + Protocol Labs framework (2017)

Investment agreement in which purchasers pay for future delivery of tokens to be issued once a network launches. Structured as a security at signing (under Reg D) with a functional-utility-token delivery at network launch. Model documents at coinbase.com/legal/safts and other sources.

SAFE — Simple Agreement for Future Equity Y Combinator open-source

Convertible-instrument standard for early-stage equity financings. Not debt; not equity; converts to equity on a defined trigger event (typically a priced round). Post-money and pre-money SAFE variants are the current standard.

SDN — Specially Designated Nationals OFAC sanctions list

OFAC list of blocked persons whose assets are frozen under US sanctions programs. All US persons prohibited from transacting with SDN-listed parties. Violations = strict-liability civil penalties; willful violations = criminal.

Securities Act of 1933 15 U.S.C. § 77a et seq.

Foundational US federal securities law regulating the offer and sale of securities. Section 5 prohibits sale without either registration or a valid exemption. Regulation D provides the primary exemptions for private placements.

Series LLC Wyo. Stat. § 17-29-1201; 6 Del. C. § 18-215

LLC structure allowing multiple internal "series," each with segregated assets, liabilities, and members. Wyoming and Delaware permit; other states' recognition varies. Useful for fund-of-funds and multi-asset holding structures; care needed for entity-level tax and Blue Sky treatment.

SPV — Special Purpose Vehicle Structured finance term of art

Entity formed to hold a specific asset or asset pool, insulate that asset from the sponsor's other business, and issue securities to investors. Bankruptcy-remote features are standard. See Bankruptcy Remoteness.

Subscription Agreement Private-placement practice

Contract between an issuer and an investor establishing the terms of the investor's purchase of securities. Contains investor representations (accredited status, no reliance, no distribution intent), issuer representations (authority, exemption compliance), and closing mechanics.

T

Token Warrant a16z Crypto open template

Convertible instrument giving the holder the right to receive tokens on a defined trigger event (typically a token generation event or network launch). Common in early-stage crypto-project financings. Should be analyzed as a security under Howey at issuance.

Transfer Agent 15 U.S.C. § 78q-1; SEC Rule 17Ad

Entity that maintains the records of securities holders for an issuer, processes transfers, distributes payments, and communicates with holders. Required for registered securities; increasingly used for tokenized private securities. Securitize is the leading transfer agent in the tokenized-security space.

True Sale Securitization / bankruptcy law

Legal-opinion conclusion that a transfer of assets from originator to SPV was a genuine sale (as opposed to a secured financing). Prerequisite for bankruptcy remoteness of the SPV's assets. Requires legal opinion from qualified counsel citing case-specific facts.

U

UBTI — Unrelated Business Taxable Income IRC § 512

Income of a tax-exempt entity from a trade or business unrelated to its exempt purpose (or from debt-financed property). Subject to tax at corporate rates. Critical consideration for pension-plan and endowment investors in leveraged real-estate or private-credit funds.

UPL — Unauthorized Practice of Law State-by-state

Prohibited conduct in every US state: providing legal advice or performing legal services without a license. Applies to non-lawyers, out-of-state lawyers, and (increasingly) automated tools. The Unykorn Legal Ops System is designed specifically to stay on the right side of this line.

V

VCOC — Venture Capital Operating Company 29 CFR § 2510.3-101(d)

Fund structure that qualifies for an exception from ERISA plan-assets treatment by meeting specified operational criteria (50%+ in operating-company equity, management rights obtained in at least one portfolio company). Alternative to the 25% Benefit Plan Investor limit.

Verification of Accredited Investor Status 17 CFR § 230.506(c)(2)(ii)

Reasonable-steps verification required for accredited-investor status in Rule 506(c) offerings. Safe-harbor methods: income documentation (W-2, 1099, tax return); net-worth documentation (bank/brokerage statements + credit report); third-party letter from attorney, CPA, broker-dealer, or investment adviser; professional-certification verification (Series 7/65/82); prior-verification carry-forward (5-year lookback).

W

Waterfall (Distribution Waterfall) See Distribution Waterfall

See Distribution Waterfall.

Wyoming DAO LLC Wyo. Stat. § 17-31-101 et seq. (2021)

Wyoming statutory framework allowing formation of an LLC that is coordinated by smart contracts and identified as a "Decentralized Autonomous Organization." First US state to recognize DAO LLCs as an entity form. Utah followed in 2023.