NASAA — the North American Securities Administrators Association — is the nonprofit membership organization of securities regulators from all 50 US states, the District of Columbia, Puerto Rico, the US Virgin Islands, and Canadian provinces and territories. Founded in 1919, NASAA coordinates regulatory policy among its members, develops model rules that state legislators and regulators often adopt, and provides investor protection education and enforcement coordination.
For issuers of tokenized securities, NASAA’s significance is practical and often underappreciated: state Blue Sky laws — individual state securities regulations — can apply to digital securities offerings even when federal exemptions are used, and navigating 50 separate state regulatory frameworks is a significant compliance burden.
Blue Sky Laws and Federal Preemption
“Blue Sky laws” is the historic term for state securities regulations, dating to a 1917 Kansas Supreme Court decision discussing speculative schemes that had no more foundation than “so many feet of blue sky.” All 50 states have Blue Sky laws requiring either registration of securities offerings or qualification for an exemption.
Federal preemption of state Blue Sky laws depends entirely on which federal exemption the issuer uses:
Regulation D 506(b) and 506(c): Fully preempted under the National Securities Markets Improvement Act (NSMIA, 1996). Issuers using Reg D 506(c) (the common accredited-investor-only tokenized security structure) do NOT need to comply with state Blue Sky registration or qualification requirements. Notice filings (Form D) must be submitted to states where sales occur, but substantive state review is preempted.
Regulation A+ Tier 2: Preempted under JOBS Act (2012 Reg A+ modernization). Issuers using Reg A+ Tier 2 (up to $75M/year, available to non-accredited investors after SEC qualification) also avoid state Blue Sky registration. This is a significant advantage — Reg A+ Tier 2 enables retail-accessible tokenized securities without 50-state registration.
Regulation A+ Tier 1: NOT preempted. Issuers using Reg A+ Tier 1 (up to $20M/year) must coordinate with individual states where they offer securities. NASAA has developed the Coordinated Review Program — a multi-state review where one state leads and others follow — to reduce the 50-state burden. But the program is not mandatory, and issuers may still need to navigate multiple state reviews.
Regulation CF (Crowdfunding): Preempted for the issuance itself, but secondary trading may be subject to state law.
NASAA’s Digital Asset Positions
NASAA has been consistently protective in its digital asset positions, issuing multiple investor alerts starting in 2017 warning about ICO (initial coin offering) fraud, crypto investment scams, and unregistered digital securities offerings. Key positions:
Token offerings as securities: NASAA has broadly applied Howey test analysis to conclude that most tokens sold in investment contexts are securities subject to state registration or exemption requirements. NASAA’s enforcement actions against unregistered token offerings (2018-2020 coordinated actions through “Operation Crypto-Sweep”) resulted in 200+ enforcement actions across member states.
Digital asset advisers: NASAA has developed model guidance for investment advisers who provide advice about digital assets, addressing custody, disclosure, and fiduciary duty requirements.
Broker-dealer digital assets: NASAA model rules on broker-dealer custody of digital assets guide state-licensed broker-dealer treatment of customer crypto holdings.
Practical Implications for STO Issuers
For issuers launching tokenized securities in the US, the NASAA framework creates the following practical landscape:
- Use Reg D 506(c) → file Form D, no state qualification, accredited investors only
- Use Reg A+ Tier 2 → SEC qualification process (3-6 months), file with states (notice only), non-accredited investors accessible
- Use Reg A+ Tier 1 → NASAA Coordinated Review, potential 50-state engagement, retail accessible but burdensome
- Use Reg CF → FINRA-registered intermediary required, $5M cap, retail accessible for small raises
Most institutional tokenized asset issuances use Reg D 506(c) or Reg A+ Tier 2 to avoid state Blue Sky complexity while maintaining access to the intended investor population.