The SEC proposes a change for easier fundraising

The SEC has announced a series of amendments that would make it easier for companies to raise funds. These amendments aim to increase the amount that companies could collect through exemptions and to extend the definition of "accredited investor".

Facilitate Security Offerings

Companies that raise investments through crowdfunding could witness a simplification of this process if the new rules proposed by the SEC were approved.

The reform to increase the limit of funds raised by companies without having to register with the SEC or submit an exemption request is addressed to the entire market, but the ones that would benefit most from it are the cryptocurrency companies.

The proposal is the latest initiative to emerge from the SEC's efforts to remove frictions from the capital increase process, said SEC Commissioner Hester Pierce in an official statement. SEC President Jay Clayton said the new proposals they will allow entrepreneurs to access capital while preserving and improving investor protection.

"The complexity of the current framework is a source of confusion for many people involved in the process, in particular for those smaller companies whose limited resources spent on applying our too complex rules are diverted from direct investments in the growth of the companies themselves."

What can cryptocurrency companies expect?

The current exemption from SEC Regulation D allows companies to raise funds from accredited investors without having to go through an expensive initial public offering process. Based on the new changes proposed to Regulation D, the maximum bid amount will be increased from $ 5 million to $ 10 million.

Updating Regulation A would increase the maximum bid amount from $ 50 million to $ 75 million, while the bid limit in the Crowdfunding Regulation would increase from $ 1 million to $ 5 million.

The proposed rules would also waive the investment limits for accredited investors and review the calculation methods applied to non-accredited investors, the SEC said. However, the main advantage for cryptocurrency companies would be the expansion of the definition of "accredited investor".

Currently, the term applies to an individual with a net worth of $ 1 million who has had a net profit of $ 200,000 or more per year for the past two years. Also included are entities that control assets of over 5 million.

The new rules would extend the title to those who have knowledge, experience or professional qualifications that allow them to make informed investments. One criticism that many address these amendments is that while rules have been established to protect small investors from predatory behavior on the market, a mechanism has inadvertently been created that prevents ordinary people from participating in the redistribution of wealth.

The SEC proposal will remain open to public comment in the next 60 days, after which it will be put to the vote.