The US Senate passed amended legislation to allow legalized “crowdfunding” today. The CROWDFUND Act (Capital Raising Online While Deterring Fraud and Unethical Non-Disclosure) was approved by nearly a 3-to-1 ratio, 73-26.
With the act’s passage, companies would be required to use SEC-approved crowdfunding platforms that provide investor protection. This is an addition to the House of Representatives’ JOBS (Jumpstart Our Business Startups) Act. Both bills have bipartisan support, with the main business concern being low investment barriers could encourage fraud. Hopefully, the Senate’s amendments address that exact issue.
Under the new legislation, yearly crowdfunding is capped at $1 million per year for businesses. Investors will also have their contributions capped based on income, with some people only allowed a maximum of $2,000. The House and Senate bills have yet to be reconciled and signed, but crowdfunding outlets like Crowdfunder already claim $13.55 million is waiting to be committed to more than 900 companies.
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Senate passes legislation to legalize crowdfunding