The US Securities and Exchange Commission (SEC) announced today that they are raising crowdfunding limitations from the present limit of US$1.07 million to US$5 million.

The new change will take place as a part of a package of amendments to its exemption offering framework allowing crypto startups to rely less on venture capital.

The new regulation for crowdfunding will allow organizations to seek securities offering off the ground without registering it with the SEC. Startups now can request non-accredited investors to invest in their startups with an affordable investment.

Accredited investors can now invest without any limitations, while the non-accredited investors may utilize their annual income or net worth to assess their investment limits. They can gradually increase the investment within 12 months.

As SEC mentions, “Anyone can invest in a securities-based crowdfunding offering,” where they will be only limited based on their annual income and net worth.

Gabriel Shapiro, A partner at BSV Law who expertise in securities law, explains that SEC’s decision elaborates, crypto firms do not have to raise money from venture capital alone. He further said that tokens sold using crowdfunding exemption (REG CF) are considered as “restricted securities,” so they will not be liquid right away.

However, it is always best to weigh the method of fund sourcing. For blockchain-based projects, venture capital funding brings in many benefits as it also brings in expert advice along with mentoring when compared with public funding.