SEC Raises Fundraising Limits for Crypto Startups and Small Businesses

Key Takeaways

  • The SEC has raised fundraising limits for companies that run securities offerings such as ICOs.
  • The amendments also streamline the regulatory compliance requirements that companies must follow.
  • Commissioner Hester Peirce is largely responsible for the success of these regulatory improvements.

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The SEC has raised the maximum limit that small- and medium-sized businesses can raise via token sales and other securities offerings.

Streamlined Regulations with Higher Limits

Commissioner Hester M. Peirce discussed the new fundraising limits on Nov. 2 as part of an SEC open meeting.

She emphasized that the changes are intended to streamline the regulatory compliance process. By simplifying rules and reducing costs, those changes should create a “pipeline” of companies that plan to go public or raise funds.

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Higher fundraising limits will make it easier for companies to make use of exemptions. Regulation crowdfunding limits will be raised from $1.07 million to $5 million, while Tier 2 Regulation A limits will be raised from $50 million to $75 million. Rule 504 offering limits will be raised from $5 million to $10 million.

Peirce also advocates for a “micro-offering” tier of Regulation Crowdfunding, which would allow businesses to raise up to $250,000 with a simplified disclosure process.

In addition to raising limits, the changes also introduce simpler rules around communication with investors. It is now easier for companies to promote their project in “test-the-waters” and “demo day” activities. The amendments also streamline the way in which companies can verify accredited investors.

The SEC’s Pro-Crypto Efforts

The changes were previously part of a conceptual release in June 2019 and a proposal released in…

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