SEC Small Business Forum Participants Target Crypto and Crowdfunding Limits

The Securities and Exchange Commission (SEC) has released a report to Congress highlighting policy recommendations for improving capital-raising policy.

The recommendations were developed by members of the public and private sectors who participated in the regulator’s 45th Annual Small Business Forum, which was held March 9, the SEC said in a Monday (July 27) press release.

The SEC’s Small Business Forum brings together members of the public and private sectors and representatives from the SEC and other federal and state agencies to share ideas on how to improve capital-raising policy.

At this year’s event, participants voted on recommendations to prioritize, choosing from those that were submitted by participants ahead of the event or at the event.

For early-stage capital raising, the event’s participants voted to prioritize expanding the accredited investor definition to include additional measures of sophistication, modernizing the regulation of crypto assets that are securities, creating a new federal friends-and-family exemption that preempts state blue sky laws, expanding resources available for funding support to small businesses, and revising Regulation Crowdfunding to increase the annual amount a company can raise under the exemption from $5 million to $20 million.

For growth-stage companies and smaller funds, the participants selected creating a new private fund exemption to foster small or regional funds focused on community-based investing, preempting blue sky laws for off-exchange secondary trading in companies that make available robust information, streamlining the pathway from the private to the public markets by making previously restricted shares available for public trading, easing compliance costs and regulatory burdens for smaller emerging fund managers, advancing the INVEST Act that aims to improve capital formation, and increasing the number of investors allowed in a fund structured under Section 3(c)(1).

For small cap companies and the public markets, participants voted to prioritize improving public trading for companies trading over-the-counter by requiring more disclosures, allowing at-the-market offerings for more companies that are current in their filing requirements, enabling more issuers to conduct offerings on Form S-3, revising Regulation A to simplify reporting requirements for small issuers, and pursuing regulatory reforms to reduce cost and liability barriers associated with being a smaller public company.