Country _ Name
Crowdfunding / crowdinvesting / crowdlending
FinTechs belonging to this category operate crowdfunding, crowdinvesting and crowdlending platforms on which money is raised to invest in various projects, mainly start-up companies and real estate projects.

Crowdfunding is not a defined financial service, but generally used to describe donation-based crowdfunding (the investor donates the money to the project), reward-based crowdfunding (the investor receives an often symbolic consideration for his investment), equity-based crowdfunding (crowdinvesting: the investor participates in the profits of the financed project or acquires shares or debt instruments) or lending-based crowdfunding (crowdlending: the investor is reimbursed at the end of the project with or without interest).


Attitude of the country towards crowdfunding, crowdinvesting and crowdlending platforms

The general rule in the United States is that any offer or sale of securities must be either registered or exempt from registration under both federal and state laws. In addition, the general rule is that persons who are engaged in the business of effecting transactions in securities for the account of others must register as broker-dealers or be exempt from such registration.

Regulator and public sentiment towards crowdfunding platforms have mostly been positive, and even encouraging. In 2010, the JOBS Act introduced three (3) new forms of legal “crowdfunding” means of offering and selling securities:

  • Regulation CF, which permitted small-scale crowdfunding to issuers raising up to $1.0 million per year as long as they complied with certain disclosure requirements;
  • Rule 506(c), similar to a traditional private placement of securities that instead permits the use of general advertising and general solicitation so long as the issuer takes reasonable steps to verify (i.e., self-certification not permitted) that all purchasers in the offering are “accredited investors”; and 
  • Tier 2 of Regulation A, also known as “Regulation A+”, where an issuer could sell up to $50 million of securities annually to nearly anyone so long as the issuer goes through an “IPO-lite” qualification process of its offering documents with the SEC and complies with ongoing reporting requirements.

In 2020, the SEC passed several reforms to further liberalise the ability of issuers to use these crowdfunding mechanisms. For example, the maximum annual limit for sales under Regulation CF was increased from $1 million to $5 million, the maximum annual limit for sales under Regulation A+ was increased from $50 million to $75 million, a number of new categories were added to the definition of the term “accredited investor,” additional means of verifying accredited investor status were added, and the test to analyse under which multiple securities offerings might be deemed integrated into a single securities offering (and thus potentially causing those offerings when viewed together to run afoul of any single registration exemption) was modernised.

On the other hand, the current administration has approached crowdfunding with far greater scepticism and has signalled that as a means of promoting investor protection it may roll back some of the liberalisations that were recently approved, including possibly making it more difficult for a person or entity to qualify as an “accredited investor.” In general, offers and sales of securities under registration exemptions are less burdensome to an issuer if the offering only involves persons deemed an “accredited investor” – which includes certain persons of high net worth, high income earners, persons with certain professional designations, and various forms of entitie



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