Section 18 of the Securities Act of 1933 was amended by the NSMIA in 1996 to provide, among other things, that the securities sold in Rule 506 offerings shall be deemed "covered securities" under NSMIA and do not need, as a condition to issuing securities in any state, to satisfy the many states' Blue Sky law requirements to be qualified nor need their issuers file any application or other form.
In absolute contrast, Rules 504 and 505 are not allowed a status as "covered securities", and the issuers who rely on thee rules would also remain concurrently subject to state-by-state compliance with all applicable state-level Blue Sky qualification requirements.
Notably, Rule Rule 506 is available in most cases if Rule 504 or 505 would be available. Rule 506's wide availability facilitates issuers' replacement of multiple unique state exemption filings or qualification filings with a more uniform filing that they make pursuant to NSMIA Rule 506.
There has been phenomenal growth in Rule 506 offerings as a portion of all Regulation D offerings. This growth corresponds completely with the amendment made pursuant to the NSMIA of Section 18 of the Securities Act. Section 506 has become the single and prevalent basis for Form D filings, and Form D's filed in reliance upon either Rule 504 or Rule 505 have become uncommon.