The SEC has simplified crowdfunding for cryptocurrency and other startups

The U.S. securities and exchange Commission (SEC) on Monday raised the limit for regulated crowdfunding campaigns to raise funding from $1.07 million to $5 million. The decision was made as part of a package of measures aimed at changing the terms of offers held on exclusive rights. It is expected that due to this, cryptocurrency startups will have more opportunities to attract investments other than venture capital in the legal field.

Regulated crowdfunding allows startups to offer securities without registering with the SEC. It is enough to limit the amount of investment for non-accredited investors. Under SEC rules, anyone can participate in such campaigns.

Thanks to the latest amendments, accredited investors will no longer be subject to restrictions, and the amount available for investment to non-accredited investors will be calculated based on their annual income, which will increase the limit for 12 months.

BSV Law partner Gabriel Shapiro believes that now cryptocurrency startups don't have to rely on venture capital. At the same time, he stressed that the tokens distributed during such campaigns are "restricted securities", meaning that their investors will not get access to liquidity immediately.

"I expect that the problem of liquidity will remain the determining factor when choosing venture capital in the early stages, after which they will try to present their token as a non-security in order to immediately reach liquidity," he said in a conversation with Decrypt. " But this may allow some blockchain projects to receive all the money from the public, and not from venture capitalists. This may in some way free them up to reach long-term paths of legal compliance."

Paul Veradittakit, a partner at venture capital firm Pantera Capital, said: "I Think it's very good that startups can now diversify their investor base, and good for platforms like Republic. We can encourage some projects to attract more through crowdfunding, if it makes sense."