SEC Makes It Easier for Crypto Startups to Raise Funds

CRYPTONAIRE LYWEEK CRYPTO investment journal

The US Securities and Exchange Commission today raised its limit on Regulation Crowdfunding offerings from $1.07 million to $5 million as part of a package of amendments to its exemption offering framework. The move should provide cryptocurrency startups with more legal pathways to funding beyond venture capital.

Regulation crowdfunding is a way for companies to get a securities offering off the ground without registering it with the SEC; startups can merely ask non-accredited investors (i.e., normal people instead of just rich people) for smaller investments.

According to the SEC, “anyone can invest in a securities-based crowdfunding offering,” though they are limited to a certain amount based on their annual income and net worth.

With the amendments voted in today, accredited investors no longer have any limits, while nonaccredited investors can use either their annual income or net worth to calculate investment limits, thereby increasing the amount they can invest in a 12-month period.

That could have an effect on how cryptocurrency companies—some of which have drawn the ire of the agency for massive token sales—pursue funding strategies.

According to Gabriel Shapiro, a partner at BSV Law with expertise in securities law, the SEC’s decision means crypto firms don’t necessarily have to raise money from venture capital funds. Read more...