SEC made crowdfunding easier for cryptocurrencies and other startups
Commission on US Securities and Exchange Commission The (SEC) on Monday raised the limit for regulated crowdfunding campaigns to raise funds from $ 1.07 million to $ 5 million. The decision was taken as part of a package of measures aimed at changing the terms of proposals held on an exclusive basis. This is expected to give cryptocurrency startups more opportunities to attract investment other than venture capital in the legal framework.
Regulated crowdfunding allows startups to conduct a securities offering without registering with the SEC. It is enough to limit the amount of investment for non-accredited investors. According to the rules of the SEC, anyone can take part in such campaigns.
Thanks to the latest amendments, restrictions will no longer apply to accredited investors, and the amount available to non-accredited investors for investment will be calculated based on their annual income, which will increase the limit within 12 months.
BSV Law Partner Gabriel Shapiro believes cryptocurrency startups no longer have to rely on venture capital. At the same time, he stressed that the tokens distributed during such campaigns are “limited securities”, that is, their investors will not get access to liquidity immediately.
“I expect the liquidity problem will remain the determining factor in early stage venture capital selection, after which they will try to present their token as a non-security in order to immediately reach liquidity,” he told Decrypt. “But it could allow some blockchain projects to get all the money from the public, not from venture capitalists. This may in some way free them up to achieve long-term paths of legal compliance “.
Paul Veradittakit, partner at venture capital firm Pantera Capital, said: “I think it’s very good that startups can now diversify their investor base, and good for platforms like Republic. We can encourage some projects to attract more through crowdfunding, if that makes sense. “.
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