SEC Improves Crowdfunding Conditions for Cryptocurrency Startups


Companies raising money through regulation crowdfunding can now raise up to $5 million, the United States Securities and Exchange Commission announced Monday.

November 3, 2020 | AtoZ MarketsThe US Securities and Exchange Commission (SEC) has increased the fundraising limit for regulated crowdfunding campaigns. Attention is also focused on cases where tokenized security tokens may also be applied.

The changes are intended to streamline regulatory compliance procedures and reduce costs, and the increased cap will make companies more likely to benefit from cost reductions.

SEC increased fundraising limit for crowdfunding

Specifically, the amendment has increased the funding limit for equity-invested crowdfunding from $ 1.07 million to $ 5 million. The SEC also raised the Tier 2 Regulation A limit from $50 million to $75 million. In addition, Rule 504 of Regulation D also raised the cap from $5 million to $10 million.

Read also: CySEC Introduces Investment-Based Crowdfunding Rules

The amendments made it easier for startups to access funding within the legal framework. In addition to increasing the limit, the regulator canceled the restrictions for accredited investors, and for non-accredited investors changed the procedure for calculating the amount available for investment.

“For many small and medium-sized enterprises, our preferential system is the only viable channel to raise capital,” said Jay Clayton, head of the commission.

In 2019, the SEC chairman said the agency’s prudent and proactive approach to cryptocurrency regulation fosters innovation and capital accumulation while protecting investors.

Notably, the US Department of Justice (DoJ) called digital assets a challenge to the law enforcement system. The department added that with the right approach, they can be useful to society.

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