The recently enacted JOBS Act created crowdfunding exemption to securities registration, allowing entrepreneurs to raise capital for their ventures from everyday investors. The crowdfunding exemption has many stipulations such as a maximum investment and offering amounts within a given period. Also, investors can only invest in crowdfunding opportunities through intermediaries that are registered as broker-dealers or funding portals. The JOBS Act created funding portal registration as an easier alternative to the more burdensome broker-dealer registration. Thus, many people believe that crowdfunding platforms will opt to register as funding portals. However, this note argues that crowdfunding platforms would rather choose broker-dealer registration because broker-dealer registration provides more revenue opportunities, flexibility, versatility, and regulatory clarity.
To Be or Not to Be a Funding Portal: Why Crowdfunding Platforms will Become Broker-Dealers,
10 Hastings Bus. L.J. 183
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