U.S SEC Proposes to Amend Exempt Offering Framework: Unlocks More Potential for Crypto Fundraising

The United States Securities and Exchange Commission (SEC) announced Tuesday that it has officially voted to propose a set of amendments that will make it easier for startups to raise funds using the regulator’s exempt offering framework.

Until now, the requirements for exempt offerings make it nearly impossible for most startups including crypto-related companies to conduct fundraising campaigns that meet the SEC guidelines. Until date, only a few crypto-related companies, notably including Blockstack has qualified for an exemption under the Regulation A+ exemption.

But, with the SEC now easing requirements, more startups are likely to qualify for an exemption. The propositions are now under review, and open to public comments upon entry in the Federal Register.

Highlights of the Proposed Exempt Offering Amendments

  • The maximum offering amount for Tier 2 offerings using the Regulation A+ exemption may be increased from $50 million to $75 million while secondary sales could be raised from $15 million to $22.5 million.

 

  • Regulation Crowdfunding offering limits may be increased from $1.07 million to $5 million with no limits for accredited investors, and not determining the investment limit for unaccredited investors on the age-long basis of their annual income and network.

 

  • The maximum offering amount for Regulation A+ could be increased from $5 million to $10 million.

 

  • The current Securities Act integration framework for registered and exempt offerings would be amended to better facilitate provide a general principle of integration that considers the particular facts and circumstances of the offering and focuses the analysis on whether the issuer can establish that each offering either complies with the registration requirements of the Securities Act or qualify for an exemption.

 

  • Simplify certain requirements for Regulation A offerings and establish greater consistency between Regulation A and registered offerings.

Meanwhile, SEC Commissioner Hester Peirce who is currently spearheading an attempt for crypto startups to operate in a safe harbor mode over a certain period published a follow-up statement following the release of the SEC’s proposal to amend the exempt offering framework.

Among other things, Peirce highlighted that the regulator could deregulate offerings, and also seek new ways to unlock the potential of crowdfunding.

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