: Platforms operated by unregulated service providers may be permissible if all regulated activities are handled by authorized third parties. Specific exemptions exist for Rule 506(c) platforms, provided they meet certain conditions.
Crowdlending Platforms: While non-bank lending is mostly unregulated, peer-to-peer lending platforms often qualify as securities offerings, subjecting them to similar regulations as other securities platforms.
Donation-based Crowdfunding and Reward-based Crowdfunding: Donation-based crowdfunding is generally unregulated. Reward-based crowdfunding may face restrictions under state sweepstakes and gaming laws, but is typically not regulated at the federal level.
Additional comments regarding the legal situation for crowdfunding, crowdinvesting and crowdlending platforms or what FinTech’s must be aware of in this business area
Issuers conducting international offerings should be cautious of potential integration issues with U.S. offerings, which could lead to complex regulatory challenges. For non-securities crowdfunding, the Federal Trade Commission (FTC) actively pursues fraudulent or deceptive practices, ensuring consumer protection.
Securities issued under Regulation CF are subject to a one-year transfer restriction. During this period, they can only be transferred back to the issuing company, to accredited investors, to family members in cases like death or divorce, or in an SEC-registered offering. After one year, these securities can be freely traded. Regulation A+ securities also face transfer restrictions for affiliates, while Rule 506(c) are illiquid private securities.
Economic conditions
Market size for crowdfunding, crowdinvesting and crowdlending platforms and biggest companies in this business area
As of 2025, Regulation CF crowdfunding remains a small segment, increasing in popularity a few years ago when the maximum annual offering size increased from $1 million to $5 million, but retracting since then, with only about 550 successful offerings closing in 2024. Key players in this space include WeFunder, StartEngine, and Republic. Many Regulation CF crowdfunding platforms also facilitate investments through Regulation A+ and Rule 506(c).
In 2024, closed Regulation A+ offerings represented less than $1 billion, which is both a tiny portion of the private placement market. and a significant regression from prior years. On the other hand, Rule 506 (c) offerings have seen substantial growth both due to market acceptance and easier means of investor verification, totaled around $140 billion as reported in filings, representing a modest portion of the overall private placement market in the U.S.
Additional comments regarding the economic situation for crowdfunding, crowdinvesting and crowdlending platforms or what FinTech’s must be aware of in this business area
Crowdfunding platforms regulated as such generally face less regulatory burden compared to broker-dealers, partly due to the investment limits imposed on individual investors. Regulation CF crowdfunding platforms are
also tasked with ensuring issuer compliance with the regulation and providing educational materials to investors.