SEC Raised The Fundraising Limits For Crypto Startups: Report

The SEC raised the fundraising limits for crypto startups and small businesses as they will now have an easier time conducting fundraises under the new rules. In today’s crypto regulation news, we are reading more about the new rules.

The SEC raised the fundraising limits for crypto startups that run securities offerings like ICOs. The amendments streamline the regulatory compliance requirements that the companies have to follow. Commissioner Hester Peirce is responsible for these regulatory improvements. The Securities Exchange Commission raised the maximum limit for small-sized and medium-sized businesses so they are able to raise tokens ale and other securities offerings. The Commissioner discussed the new limits as a part of the SEC open meeting.

The SEC took some steps today to make it easier for small- and medium-sized businesses to navigate the complexities of capital-raising: https://t.co/aTbia5Q5WM

— Hester Peirce (@HesterPeirce) November 2, 2020

She outlined that the changes are intended to streamline the regulatory compliance process and by making it simple and by reducing the costs, these changes will create a “pipeline” of companies that plan to go public or to raise funds. The increase in fundraising limits will make it easier for companies to make use of exemptions. The new 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. The rule 504 offering limits will be raised from $5 million to $10 million.

Peirce advocated for micro offerings tier for Regulation Crowdfunding which will allow the businesses to raise up to $250,000 with a disclosure process. In addition to raising limits, the changes introduce a way for companies to easily communicate with investors and to eventually promote their projects and “demo-day” activities. The amendments also create a way for companies to raise up to $250,000 with a simplified disclosure process.

The changes were a part of the conceptual release back in 2019 and a proposal released in March 2020. Today’s news made these proposals a reality so the amendments will take effect 60 days after publication in the Federal Register. These policies will apply to all companies that sell securities but the rule will only benefit the crypto startups that are eligible for relevant exemptions. Pierce said that “today’s rulemaking applies generally to securities offerings and does not address crypto specifically.”

The SEC is opening up for crypto fundraising in other ways as well. It expanded the definition of accredited investors so this proposal that will benefit crypto startups is under consideration as well. these improvements will make it easier for companies alike to participate in an ICO.