Crowdfunding Stifled at Home, Expands Overseas

Crowdfunding, which pools small donations from large amounts of investors, continues to make large, sweeping global inroads. From a donation site supporting the arts to a value-for-value trade to a platform that investors use to find a return on their investment, crowdfunding is becoming a highly sophisticated and radical game-changer. But as it moves towards a business model that attracts more traditional investors, risk also increases.

In the United States, however, there has been some foot dragging when it comes to the specific rules governing certain types of crowdfunding. The Jumpstart Our Business Startups Act of 2012 gives the Securities and Exchange Comission until next year at the earliest (does it really need to take that long?) to establish those rules. Rather than speed up this ridiculous bureaucratic timetable during the most trying economic times since the Great Depression, the SEC has muddied the process by disputing who qualifies as an “accredited investor.”

At the end of August, the North American Securities Administrators Association identified “Crowdfunding and Internet Offers” as a top emerging investor threat.