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SEC Finalizes Rule Change That Could (One Day) Juice Token Sales

Companies can now raise more money under three key securities exemptions without having to register with SEC.

Updated Sep 14, 2021, 10:26 a.m. Published Nov 2, 2020, 8:15 p.m.
U.S. Securities and Exchange Commission Chairman Jay Clayton
U.S. Securities and Exchange Commission Chairman Jay Clayton

The U.S. Securities and Exchange Commission (SEC) has increased limits dictating how much capital companies can raise before registering in a move that could be a boon for security token offerings (STOs).

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  • Companies can now raise $5 million in total under Regulation Crowdfunding provisions (previously: $1.07 million), $75 million under Regulation A+ (previously: $50 million) and $10 million under Rule 504 of Regulation D (previously: $5 million), the SEC said.
  • As CoinDesk reported in March, the heightened caps could make it easier for startups to conduct security token offerings without running afoul of the regulator.
  • SEC also relaxed certain restrictions governing document filing, solicitation practices and accredited investor investment limits in the Monday announcement.
  • Chairman Jay Clayton said the changes will ease the burden of capital formation for small and medium-sized businesses.

Read more: SEC Proposal Could (Eventually) Unleash Security Token Sales

In addition to making it easier to raise funds, startups will be able to raise more money and provide themselves a bit more runway as they try to launch operations than under the old caps.

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