Appendix Q — 💼 Impact Securities Reform Act

Section 1. Purpose

To accelerate financing for public‑good initiatives (e.g., the dFDA, DIH, and the 1% Treaty), this Act creates an “impact securities” category with simplified offering, expanded investor participation, and automated, on‑chain disclosures, preserving investor protections while lowering capital formation frictions.

Section 2. Definitions

  • “Impact Security”: A financing instrument whose proceeds are predominantly allocated to measurable public‑good outcomes (e.g., reductions in disease burden, DALYs, or verified fiscal savings), subject to transparency and outcome reporting.
  • “On‑Chain Reporting System”: A public blockchain‑based registry that provides real‑time disclosures: use of proceeds, reserves, liabilities, coupon accruals, coverage ratios, disbursements, auditor attestations.
  • “Outcome Oracle”: A public methodology and set of data sources used to compute societal outcomes (e.g., QALYs gained) with auditable code and data provenance.

Section 3. Impact Securities Safe Harbor (Offering and Distribution)

No pre‑filing or pre‑clearance is required under this safe harbor. If the live, public on‑chain disclosures specified in Section 4 are available at launch and continuously maintained, issuers may offer, sell, and resell impact securities without prior agency approval or periodic paper filings, subject only to applicable anti‑fraud laws and jurisdictional KYC/AML.

  • Universal Exemption: Offerings of impact securities qualify regardless of raise size, conditioned on on‑chain disclosures and KYC/AML as required by applicable law.
  • Preemption: State blue‑sky law preempted to enable cross‑border digital offerings.

Section 4. On‑Chain Disclosure and Reporting (Automation)

  • Mandatory public, machine‑readable disclosures via an on‑chain registry:
    • Use of proceeds; proof‑of‑reserves; liabilities; coupon schedules; waterfall and seniority; covenant checks; incident logs.
    • Open‑source report schemas; cryptographic attestations.

Section 4A. Marketing & Disclosures Safe Harbor (Plain-English, Outcome-Linked)

  • Issuers may state targets and objectives (e.g., “risk‑adjusted returns competitive with leading alternatives”) if:
    • All marketing references outcomes as targets, not guarantees; includes standardized risk warnings.
    • Payouts are described as capped shares of verified inflows/savings; the cap and methodology are prominently disclosed.
    • A standardized, plain‑English “Key Facts” box is provided (use of proceeds, risks, fees, max payout share, seniority, governance rights, dispute channels), not to exceed 500 words.
  • Performance advertising safe harbor: Comparative statements must cite a public benchmark and link to the on‑chain EV methodology; backtests must be clearly labeled and reproducible.

Section 5. Token Classification Safe Harbor (Governance and Utility)

  • Tokens with the following characteristics are presumed non‑securities unless marketed with profit promises:
    • Primary functions are governance, access, or usage within a protocol.
    • Public on‑chain disclosures of treasury, token supply, and admin keys.
    • No contractual right to profits; no promises of appreciation; reasonable decentralization criteria.
  • Transitional Path: A 3‑year safe harbor for network decentralization and disclosures, after which tokens can qualify as non‑securities if criteria are met.

Section 6. Outcome‑Linked Incentives (Impact‑Based Value Capture)

  • Permit capped value‑sharing rights for impact securities tied to verified savings/outcomes (e.g., a basis‑point share of measured payer savings), with guardrails:
    • Public calculation methodology; third‑party validation; clawback for fraud.
    • Caps to prevent excessive privatization of public savings; sunset clauses.

Section 9. Implementation

Section 10. Enforcement and Remedies

  • Anti‑fraud provisions apply. Failure to provide required disclosures or manipulation of outcome data voids safe‑harbor protections and triggers enhanced penalties.

Commentary: Relation to dFDA/DIH and VICTORY Bonds

  • This Act enables compliant financing for VICTORY instruments and the DIH Treasury by:
    • Lowering offering frictions for impact-linked bonds/tokens.
    • Automating disclosures on‑chain to improve transparency and lower costs.
    • Broadening investor access with knowledge‑based eligibility.
    • Providing a clear token safe harbor for governance‑first designs.
  • It complements the risk, return, and repayment framing in the Victory Bond Investment Thesis.