Newest Version Of JOBS Act Wins Approval In The US House

Raising capital could become easier for businesses, especially smaller firms, under legislation that easily made it through the U.S. House of Representatives this week. But the prospects for passage appear murkier in the Senate.

Commonly known as the JOBS Act 3.0, the package of 32 bills that covers investment, financial regulations and other topics of prime concern to payments entrepreneurs and other industry players won approval Tuesday night (July 17) via a 406-4 vote in the House.

The Tuesday vote stands as the latest development in a years-long, ongoing effort that, in the words of Rep. Jeb Hensarling, the Republican from Texas who is the lead sponsor of the new bill, could “spur entrepreneurship by reinvigorating business startups and initial public offerings.”

According to comment he made on the House floor this week, the bill could “ensure that our entrepreneurs at least don’t face the challenge of having the capital they need to launch their companies.”

JOBS stands for Jumpstart Our Business Startups, and the initial version of the JOBS Act was signed into law by President Obama in 2012. How to handle crowdfunding investment has long been a focus on the efforts covered under the law and its proposed revisions.

One way that the package of bills that constitute the act could do that is via the Crowdfunding Amendments Act, also known as H.R. 6380, which “allows crowdfunding investors to pool their money together into a fund that is advised by a registered investment advisor.” The provision would reportedly allow startups to raise $1 million every 12 months through qualified funding portals.

“These special-purpose vehicles may make Title III crowdfunding more appealing to both businesses trying to raise capital and prospective investors,” reads one analysis. “In particular, they may make crowdfunding more attractive to startups daunted by the prospect of having to track hundreds or even thousands of investors in their capitalization table.”

The United States is not the only country or region that’s seeking to change the rules when it comes to crowdfunding.

The European Commission has recently floated the idea of issuing so-called “passports” for crowdfunding startups in an effort to drive growth in the financial technology sector. The proposal would enable a FinTech that wants to provide crowdfunding across the bloc to receive a passport license issued from the European Securities and Markets Authority. The European Commission’s proposal would cover crowdfunding of up to a million euros over the course of a year.

Another part of the bill that passed the U.S. House earlier this week was the Investment Adviser Regulatory Flexibility Improvement Act. That bill would require the SEC to revise the definitions of a ‘‘small business’’ and ‘‘small organization’’ under the Investment Advisers Act.

Prospects for the bill package were uncertain in the U.S. Senate, with several observers doubting that the legislation would find easy passage.

“Now that the House has passed their bipartisan legislation to improve access to capital for communities across the country as they grow and create jobs, senators will continue their ongoing bipartisan discussions as we work towards a vote in the coming months,” Senate Majority Leader McConnell said in a statement.