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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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NCFA Jan 2018 resize - US Investment Crowdfunding Exemptions Explained The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org

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