Friday, November 27, 2020

SEC votes to simplify exempt offering rules for securities

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The United States Securities and Exchange Commission voted to amend a set of rules to simplify and improve the “overly complex” procedures for exempt securities offerings.

According to an announcement Monday from the SEC, the proposed changes aim to “harmonize, simplify, and improve” the existing “overly complex” framework to make it easier for companies to conduct offerings while still protecting investors. The regulatory body stated that the amendments would “address gaps and complexities” in the current exempt-offering framework, facilitating access to investment opportunities for investors and to capital for securities issuers.

“For many small and medium-sized business, our exempt offering framework is the only viable channel for raising capital,” said SEC Chairman Jay Clayton. “These businesses and their prospective investors must navigate a system of multiple exemptions and safe harbors, each with different requirements. While each component in this patchwork system makes some sense in isolation, collectively, there is substantial room for improvement.”

Most of these attempts improvements include 

Under current regulations in the U.S., securities offerings — which include initial coin offerings — must either be registered with the SEC or qualify for an exemption. Many entrepreneurs, emerging businesses and experienced securities issuers raise capital using the exempt-offering framework.

The SEC has seemingly taken a “regulation through enforcement” approach toward many crypto projects that it believes have broken existing regulations around unregistered securities. Its case against Telegram resulted in the company abandoning its planned open network and linked Gram tokens, which raised $1.7 billion in its offering. 

The regulatory body first proposed simplifying the existing framework in June 2019 and announced in March that it had voted on a proposition to introduce the set of rule changes.