The 12(g) ceiling, in practice
Every tokenized private issuance we've studied treats 2,000 holders as a hard ceiling. The policy was never meant to be one.
Section 12(g) of the US Securities Exchange Act establishes what was intended to be a threshold — cross 2,000 holders of record, or 500 non-accredited holders, and you register with the SEC. In the traditional private-markets world, the threshold functioned as intended: most issuances were nowhere near it, and the handful that approached it were genuinely becoming wide-distribution issuances for which public-issuer disclosure was appropriate.
In the tokenized private-markets world, the threshold functions differently. Every tokenized issuance we have studied treats 2,000 as a hard operational ceiling. Issuers explicitly cap holder counts in their smart-contract logic. They force-redeem long-tail holders. They route secondary trades through single-intermediary structures that keep the "record holder" count at one or two.
Each of these workarounds preserves literal compliance with 12(g). Each of them also defeats the economic properties — wider distribution, deeper secondary liquidity, lower intermediation — that made tokenisation attractive in the first place.
The policy was not designed to function as a ceiling. It was designed to function as a trigger: cross this threshold and additional obligations attach. It became a ceiling because tokenisation made the count exact and unambiguous, changing the nature of the threshold without changing its nominal level.
Our policy brief (BA-2026-04) proposes a tokenisation-aware reform: replace the 2,000/500 holder count with a tiered regime keyed to aggregate holder value. The reform is feasible within existing SEC rulemaking authority and does not require legislation. We have shared it with staff at the SEC and with counsel for several issuers grappling with the ceiling; the reception has been constructive.