US Investment Crowdfunding Exemptions Explained

Crowdfund Insider | JD Alois | Mar 11, 2022

equity investment crowdfunding - US Investment Crowdfunding Exemptions ExplainedIn the United States, securities or investment crowdfunding was legalized under the JOBS Act of 2012. This bi-partisan legislation was in recognition of changes in technology as well as an understanding of the need to better facilitate capital formation for early-stage firms.

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Effectively, there are three main securities exemptions utilized in the US to raise money online.  The below document is a high-level summary of the different exemptions (not legal advice).

  • Regulation Crowdfunding or Reg CF
  • Regulation A or Reg A+
  • Regulation D 506c or Reg D 506c

Reg CF is an exemption that enables issuers to raise up to $5 million from anyone. Issuers must list the securities offering on a FINRA regulated Funding Portal or Broker-Dealer.  Securities crowdfunding is still a young industry that continues to evolve. Last year, the SEC enabled several material changes to improve online capital formation.

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