SEC Seeks Comments on Extending Crowdfunding Platform Safeguards
Published Date: 3/27/2025
Notice
Summary
The SEC wants to keep the rules for crowdfunding platforms (intermediaries) just as they are, making sure they stay registered, check issuers properly, and share info with investors online for at least 21 days. This affects crowdfunding websites and their users, with no new costs or big changes, just an extension of current rules. Comments are open now before the SEC asks for official approval to keep things running smoothly.
Analyzed Economic Effects
4 provisions identified: 1 benefits, 2 costs, 1 mixed.
Estimated Industry Compliance Costs
The SEC staff estimates that 135 intermediaries engage in crowdfunding activity and that complying with Rules 300-304 imposes an annualized industry burden of 27,732 hours and total costs of $16,960,716. The Commission plans to submit the existing information collection for extension and approval.
Platforms Must Stay Registered
If you run a crowdfunding platform, you must remain registered with the SEC as either a broker or a funding portal and be a member of a registered national securities association (the notice notes FINRA is currently the only one). The SEC is seeking an extension to keep these existing registration requirements in place.
21-Day Posting and Escrow Protections
Crowdfunding platforms must post the issuer information on their platform for at least 21 days before any securities are sold and must let people save or download that information. Funding portals must direct investors to transmit funds to a qualified third party that holds and promptly transmits or returns funds, and registered brokers must follow Rule 15c2-4 for transmission or maintenance of payments.
You Must Open Account Before Investing
If you want to invest through a crowdfunding platform, the platform cannot accept your investment commitment until you open an account with the intermediary and give consent to receive materials electronically. This requirement comes from Rule 302 of Regulation Crowdfunding.
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