The Jumpstart Our Business Startups Act, or JOBS Act, was passed in 2012; a major provision of this new law was the introduction of crowdfunding. Crowdfunding would essentially allow small businesses to raise money from ordinary Americans without having to register with the SEC. These small companies would now be able to sell shares in their business to a much broader pool of investors that ever before, and people were extremely excited about the ways in which crowdfunding could change the way people do business.
Unfortunately the SEC wasn’t as excited. It took them more than 18 months to release a set of proposed rules and regulations that would ensure the validity of crowdfunding organizations and protect investors and business owners alike. The proposed regulations are still open for review and change, but as of right now the SEC will require all crowdfunding transactions to be conducted by an intermediary registered with the SEC and will place a cap of $1 million on funds that can be raised without registering your business with the SEC.Share