Crowdfunding has grown into a powerful mechanism for small businesses and creative projects alike, and now the U.S. Securities and Exchange Commission is proposing a new set of rules to regulate the practice, making it safer for investors.
Among the rules, the SEC is placing a $1 million cap on the amount of equity a company can raise through crowdfunding and requires those raising more than $500,000 to "file more detailed information to the SEC."
The proposal also places a limit on the amount a single investor can commit to a crowdfunded business and restricts purchases of securities to online crowdfunding portals, "a new class created by the SEC," writes Christine Lagorio-Chafkin of Inc.com.
But nothing is in stone, yet. Over the next 90 days the SEC is asking the public to comment on the new rules before they come up for a vote.
Crowdfunding is all about democratizing the marketplace. Now's your chance to apply some democracy to crowdfunding.