Can Your Portal Handle Compliance?
We talk to hundreds, if not thousands, of people looking to start a crowdfunding platform on a regular basis. Many do so to streamline their current processes, some to broaden their investor reach, and others to start up something new. Many organizations are content with one or two offering types, but what if they wish to do more? or expand internationally? Will their current platform support that decision?
Crowdfunding laws are being created and refined almost every day worldwide. Having the ability to pivot and adjust to new regulations and compliance standards is key in keeping your portal up and running even when your offering type and jurisdiction remain the same. As these new regulations expand, the flexibility to offer deals in multiple jurisdictions will give an added edge over the competition. This is something that CrowdEngine has pioneered from the beginning. Rather than building a solution whose software is limited by our own interpretation of what is “compliant”, we have developed a system that allows our clients to structure deals which adhere to their own respective jurisdiction and compliance requirements. Should a governing body add new requirements or change existing compliance standards, our platform can easily account for the change without causing downtime due to the need to re-code how the offering functions.
Compliance is not a single event that can be hardcoded in a “one size fits all” manner, rather it involves a continual adjusting and refining process as the guidelines become ever more established. Having the long term architecture and control of your portal in order to avoid downtime, fines, and even jail time should be the highest concern when selecting a technology provider. An unjustified reliance on a group that claims to have all the compliance answers hard-coded is an unjustified mistake.
International (Multiple countries/jurisdictions)
For those looking to offer deals in multiple jurisdictions and internationally this is a MUST. Staying compliant in multiple countries simultaneously is a no brainer for any international brokerage. Those who have the foresight to implement a versatile solution early will win the race to be first to market when crowdfunding laws are introduced to new territories. The ability to pivot will always keep you ahead.
United States (All national offerings)
In the U.S. we currently allow Reg D: 506(b) and 506(c), Reg A+: Tier 1 and Tier 2, Intrastate (for more than 37 of the 50 states), and Reg S (International) offerings, not to mention the advent of the much anticipated Title III. CrowdEngine architected the ability for portal owners to use their own legal interpretations for compliance, rather than opinions from those who are not affiliated with their business or familiar with their model. Consider the implications of new case law which reveals that your portal configuration may be affected more liberally or conservatively than before the ruling. Will you be able to immediately adjust to the new guidelines?
Intrastate (Individual state laws in the U.S.)
As we wait for Title III to make its way through Congress, the majority of states have opted to pass their own laws pertaining to non accredited investment opportunities. However, each state may have a distinct set of rules to be followed. In these cases, investors are also limited by the requirement that they are residents of the state in which the investment originates. While it’s possible to build a portal catered to a single state, with CrowdEngine you don’t have to. You can offer deals from multiple states, as well as national offerings while keeping compliant, and maintaining the versatility to adjust when Title III passes.
The CrowdEngine platform is structured to solve these issues and prevent problems with compliance or functionality, as well as provide for easy resolution if the need for change arises. Remember to configure to the standards you and your counsel deem appropriate, not based on what is handed to you by someone who may not understand your business model or to what seemed compliant “once upon a time.”