Last October, the US Securities and Exchange Commission released this update, which detailed the adoption of the final rules surrounding equity based crowdfunding offerings. The concept was first addressed as part of the Jumpstart Our Business Startups (JOBS) act way back in 2012, which was signed in by Barack Obama, as a tool that would facilitate the process through which small and medium business enterprises gain access to operating and development capital.
Up until now, it has been illegal for existing companies or startup projects to offer equity in return for capital through crowdfunding – primarily because capital-equity transactions must adhere to financial authority (in this case the SEC) regulatory framework. Crowdfunding is not a new concept, but the last decade has seen the space expand, and with the expansion, the need for relevant regulations that allow equity transactions.
So now its here, why are we talking about it? Well, one of the most obvious applications for bitcoin (and the blockchain, but we’ll talk about that shortly) is crowdfunding. A number of companies have attempted to set up traditional crowdfunding model (i.e. perks and rewards in place of equity) bitcoin platforms, but with little success. Most of the names in