Proposed amendments to the trillion dollar securities exemption market and the tech out there to help issuers streamline the capital raising process

By Vanessa Malone

Last week, the Securities and Exchange Commission (SEC) announced that it has voted to propose a set of amendments to simplify and improve common securities exemptions issuers use to raise capital.

Among these securities exemptions include Regulation D (Reg D), Regulation A+ (Reg A+) and Regulation Crowdfunding(Reg CF), three of the most commonly used and talked about exemptions. This isn’t surprising, as the SEC reported the estimated amount raised across the exemptions reached more than~$2.6 trillion in 2019. More and more, small and mid-sized companies ready to scale are looking to these more affordable and innovative ways to raise capital.

Securities and Exchange Commission

With the newly proposed amendments it seems as if the regulators agree. Overall, the amendments aim to-

  • Reduce friction as issuers move from one exemption to another. For example, issuers who are interested in first conducting a private placement using Reg D to accredited investors, then opening the investment opportunity to their fans and the general public utilizing Reg A+.
  • Increase the amount an issuer can raise in an offering for certain exemptions and amend investor eligibility rules.
  • Provide clarity to issuers and investors regarding investor communications. For example, while general solicitation is permissible using Rule 506(c) of Regulation D and Reg A+, Reg CF currently has restrictions.
  • Amend what issuers need to disclose and what makes them eligible for exempt offerings. The goal is to better align the requirements across the exemptions while enhancing investor protections.

For Reg A+ 

  • Raise the capital raising maximum under Tier 2 from $50 million to $75 million
  • Raise the maximum offering amount for secondary sales under Tier 2 from $15 million to $22.5 million.

For Rule 506(C) of Regulation D

  • Add a new item to the non-exclusive list of verification methods 

For Reg CF

  • Increase capital raising maximum from $1.07 million to $5 million
  • Remove investment limits for accredited investors and revising the calculation method for non-accredited investors so they may rely on the greater of their annual income or net worth

We look forward to seeing the benefits that come from these proposed amendments and believe they will in effect provide greater clarity and drive more issuers to take advantage of these exemptions. 

Doug Ellenoff, Managing Partner of Ellenoff, Grossman and Schole; and Counsel to the Association of Online Investment Platforms; and a founders-round investor in Horizon shared the following comment with Crowdfundinsider:

“I am very encouraged by the SEC’s efforts and initiatives to simplify the ever complex exempt offering exemptions and examine and make recommendations on how to streamline what amounts to a confusing series of rules enacted over decades,” said Ellenoff.

We couldn’t agree more. And while regulatory clarity like this is imperative for growth, we believe that opportunities can be missed if the tech and infrastructure aren’t there to support it.

Our mission at Horizon has always been to complement regulation to power the next generation of securities offerings and exchange with our proprietary compliance and trading technology. 

Just like regulators are adapting to the demands of today’s issuers and investors, Horizon recognized and addressed some unmet needs when it came to conducting a compliant securities offering and are proud to say our technology supports the above securities exemptions.

It was a lack of integrated fundraising solutions, especially ones which leveraged the many benefits of blockchain-based technology, that ultimately led our founding team to create our product suite leveraging the Ethereum public blockchain. 

We believe that by having a fully integrated digital securities “tech stack” not only streamlines the capital raising and investment process for issuers and investors, but can also lower the barrier of entry for market participants to confidently move toward blockchain trading solutions. 

We believe this path also leads to incredible benefits including transparency, programmed compliance, timestamped records, and a plethora of secondary trading benefits when paired with Horizon’s technology including blockers against any market manipulations, instant settlement, and transparent orderbooks.

Horizon’s methodology has always worked to keep in step with today’s regulatory landscape and make educated guesses as to where it is headed, which we’ve had success in thus far. We believe our one-stop-shop to conduct securities offerings works to reduce friction and increase transparency while enhancing important investor protections. 

Horizon offers a one stop shop with tools from issuance through to secondary trading that were built to adhere to global and U.S. compliance standards. To learn more about conducting an offering using Horizon’s platform, visit Horizon’s $5 million series A round is now open for investment. Please reach us at to receive investment materials.


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