U.S. CrowdFunding Bill

[Stephen Gornick]

saying indiegogo was illegal before this bill?

IndieGogo and KickStarter aren't today giving out equity.  They are donation-based.

But they did introduce this concept of kickbacks to the backer, which usually ends up being a form of pre-selling the product. 

KickStarter is backing away from that model. 

IndieGogo is moving foward as an equity crowdfunding portal.

Both of them though have essentially been enabling crowds to fund companies that might not otherwise have been able to get funding.

[1713857768]

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[1713857768]

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[420]

saying indiegogo was illegal before this bill?

IndieGogo and KickStarter aren't today giving out equity.  They are donation-based.

But they did introduce this concept of kickbacks to the backer, which usually ends up being a form of pre-selling the product. 

KickStarter is backing away from that model. 

IndieGogo is moving foward as an equity crowdfunding portal.

Both of them though have essentially been enabling crowds to fund companies that might not otherwise have been able to get funding.

they give gifts and props from the sets

[Stephen Gornick]

what the fuck does the bill do? i want 1-3 sentences...

Well, it is looking like it doesn't do a whole lot.

Typical KickStarter deals won’t naturally transfer to equity crowdfunding and the vast majority of startup founders won’t receive any help at all from the JOBS Act.
[...]
The JOBS Act is headed toward disappointment. I expect the average deal size will be around $500,000. This is not bad in itself, but it leaves out in the cold most startups.

 - http://www.cringely.com/2012/11/17/jobs-act-crowdfunding-is-unlikely-to-help-most-startups

[Rudd-O]

And the CROWDFUND act has guaranteed that legal crowdfunding is a stillborn venture.

Tadaaaaa, the magic of government protectionism of existing schemes.

[Rudd-O]

S.2190 the CROWDFUND Act passed in the Senate this past week.

This is good information to know.  Thank you!

So give it nine months before the unwashed masses will be given the immense privilege of being able to invest $100 into someone else's project.

From the angle of your post, you seem to be purposing this information more toward IPOs than Kickstarter sites.  Investment generally, though, is not a privilege that's allotted to us in drips and drabs by people who purport to be our political representatives.

There are many details though -- assuming they remain in the Act and become law.

That's a pretty big assumption.  It will probably remain in the Act, and the Act will get passed.  But people have forgotten these days that just because legislation is passed, it doesn't automatically become law.  Legislation is a paperwork term, a term of bureaucracy.  It refers to the process; are all the papers signed by the right parties?  dated correctly?  handed in on time?  Then it's legal.

But to also be law, it must be valid in law.  That means it must correctly adhere to the proper delegation of authority.  In the U.S., the delegation of authority goes from God -(into man's system of law)-> to the People -> to the political representatives we delegated.  With the Constitution, we delegated certain specific authorities to our representatives.  Anything not specifically delegated remains with the People, or with the various States.

That hasn't stopped any number of politicians drafting all manner of legislation and getting it passed, but it certainly doesn't make it law.  If we remembered that political authority doesn't arbitrarily flow out of a politician's pen, we wouldn't be so concerned when stuff like the blatantly unconstitutional NDAA passed last December for example, with 93 of 100 senators voting in favor of obvious treason.  Because we would all know it was void the moment it was penned, and never could be law.  Nobody would adhere to it as if it were, and we'd have quite a response to politicians who have the temerity to draft this stuff.  But for now, since the People have forgotten the nature of the political structure they built, politicians have been getting away with it with impunity.

On a more practical basis, an increase in legislation limiting crowdfunding will probably lead to a public increase in Kickstarter-like sites on the darknet.  Where the crowds can collectively fund anything they like.  Seems like the natural social response.

Stuff like these regulations by the state make my head want to explode. I cannot express in words how pissed I got when I read the OP.

hazek, I quoted your response because my point above speaks directly to it.

Im sure they will let you invest unimited funds into the government ie "political donations"

It shouldn't be that long before someone creates a Kickstarter/BitCoin for taking down corrupt politicians and CEOs.  Wouldn't take much; a crowdsourced Wiki [that requires people to cite their sources] that also creates a ChipIn-like BitCoin fund to pay the court costs and the attorneys' fees.  Any court-awarded damages could go directly back to the users who invested in that fund, in whatever proportion they invested.  People could actually profit from sorting out all the corruption among corporations and politicians.  I mean, we are in a target-rich environment there.

Never gonna work. They'll kill you first. Do you really think that Jones is going to let any of the Negroes in his plantation organize against him?

[World]

this is interesting
https://github.com/lockitron/selfstarter

[Stephen Gornick]

Well, it is looking like it doesn't do a whole lot.

Typical KickStarter deals won’t naturally transfer to equity crowdfunding and the vast majority of startup founders won’t receive any help at all from the JOBS Act.

And even what little it does do, it doesn't look like it will be happening anytime soon (nonetheless January 3rd like many were projecting back when President Obama signed the bill in April):

JOBS Act rulemaking is likely to be put on hold or at least slowed down in the interim.

SEC Chair Schapiro to Step Down, Likely Delaying JOBS Act Crowdfunding
 - http://www.crowdsourcing.org/editorial/sec-chair-schapiro-to-step-down-likely-delaying-jobs-act-crowdfunding/21974

[Edit: On a positive note, Bitcoin-enabled equity crowdfunding platforms (none of which are waiting for the SEC rules) are now here and more are  being developed with at least one particularly good implementation arriving real soon now.]

[420]

how'd the bill do?

[Rudd-O]

Well, it is looking like it doesn't do a whole lot.

Typical KickStarter deals won’t naturally transfer to equity crowdfunding and the vast majority of startup founders won’t receive any help at all from the JOBS Act.

And even what little it does do, it doesn't look like it will be happening anytime soon (nonetheless January 3rd like many were projecting back when President Obama signed the bill in April):

JOBS Act rulemaking is likely to be put on hold or at least slowed down in the interim.

SEC Chair Schapiro to Step Down, Likely Delaying JOBS Act Crowdfunding
 - http://www.crowdsourcing.org/editorial/sec-chair-schapiro-to-step-down-likely-delaying-jobs-act-crowdfunding/21974

[Edit: On a positive note, Bitcoin-enabled equity crowdfunding platforms (none of which are waiting for the SEC rules) are now here and more are  being developed with at least one particularly good implementation arriving real soon now.]

Unfortunately, it will only take one man being caged for running one of these platforms, for the whole Bitcoin equity crowdfunding model to be stillborn.

[Stephen Gornick]

There needs to be a term for a person who has the audacity to invest as a "non-accredited" investor.

Self-accredited?

Wildcat?

Desparado?

Incidentally, instead of being able to eagerly anticipate the SEC's release of the results of their rulemaking at the beginning of 2013 it appears the exit of SEC Chairman Shapiro will delay by "months - if not a year - until equity crowdfunding can be fully addressed".

 - http://www.bizjournals.com/sanjose/news/2012/12/13/crowdfunding-expected-to-stall-during.html
 - http://online.wsj.com/article/SB10001424127887324339204578173731988591450.html

[420]

someone tell me what this crowdfunding bill meant

BTC0.01 reward

[myrkul]

someone tell me what this crowdfunding bill meant

BTC0.01 reward

Distraction of the week?

[420]

someone tell me what this crowdfunding bill meant

BTC0.01 reward

Distraction of the week?

was it signed into law?

[myrkul]

someone tell me what this crowdfunding bill meant

BTC0.01 reward

Distraction of the week?

was it signed into law?

Not that I can see. Stalled in house subcommittee, near as I can tell.

[Stephen Gornick]

someone tell me what this crowdfunding bill meant

There were a lot of facets to the bill.  The ones specific to crowdfunding allow a company to go through a crowdfunding portal to raise capital from non-accredited investors.  Accredited investors are those with significant net work and income (e.g., $1 million net worth, not including a home).

Currently there are a lot of projects raising money through Kickstarter.  There was the hope that the JOBS act would allow that type of project to be launched in which equity in the project would be owned by supporters.  That is not what the JOBS Act will do however.   There still will be a significant up-front investment to be able to offer equity through a crowdfunding portal.   

Exactly what will be required though is still being worked out by the SEC, with the details now delayed until much later this year.

Now we know first-hand both the risks and rewards from equity crowdfunding thanks to the now-defunct GLBSE, and thanks to a few other cyber-equity stock markets.  We know that scammers are attracted to this (e.g. a very long list)but also that incredibly profitable ventures can be the result as well (e.g., ASICMINER and SatoshiDICE).   

But we'll never see these types of exchanges be compliant with U.S. securities law, even after the JOBS act rulemaking is completed

So that doesn't really tell you a whole lot about what the crowdfunding bill is, but it does tell you what it isn't.

[Viceroy]

It's your thread and so...

>But we'll never see these types of exchanges be compliant with U.S. securities law, even after the JOBS act rulemaking is completed

Why do you think it's inconceivable for a bitcoin exchange to operate in the US?  Until bitcoin is a called a currency it's as simple as getting a money transmitter license and building the software.  https://bitcointalk.org/index.php?topic=179147.0


More importantly when is the crowd-funding law going to go into effect?  I've been waiting for a year already.... (damn SEC).

[Stephen Gornick]

Why do you think it's inconceivable for a bitcoin exchange to operate in the US?

I guess I paint with a wide brush.

One of the allures of a BitFunder, for instance, is that an issuer can register, be listed and complete an IPO in a short amount of time and at little expense.  These factors are nowhere in the list of top 100 priorities for the SEC.    They aren't looking to enable scrappy entrepreneurs.  They are looking to have layers of filters, which is what was more needed before this thing called the Internet enabled individuals to do a halfway decent job of due diligence on their own.

Additionally, one of the allures of investing and trading on an cyber-equities exchange like BitFunder is that accounts are pseudonymous -- so there's no limitation that would restrict investor base to any geographic or jurisdictional boundaries.   There is no way an exchange with anonymous accounts will ever be operating with the SEC's blessing.

What could happen is that an online broker could accept bitcoins as a funding method.  Like e-Trade letting you add funds which are converted to USDs and credited to your account for trading NYSE, NASDAQ and other listed securities.  

[Viceroy]

fair enough.  but a little registration only gives up a little liberty so Franklin would only be a little unimpressed.  personally i look forward to a day of NASDAQ like crypto currency exchanges.  and with crowdfunding maybe an American exchange can even offer loans to start up entrepreneurs...

so, when will the sec get the rules done?

[Minor Miner]

It's your thread and so...
>But we'll never see these types of exchanges be compliant with U.S. securities law, even after the JOBS act rulemaking is completed
Why do you think it's inconceivable for a bitcoin exchange to operate in the US?  Until bitcoin is a called a currency it's as simple as getting a money transmitter license and building the software.  https://bitcointalk.org/index.php?topic=179147.0
More importantly when is the crowd-funding law going to go into effect?  I've been waiting for a year already.... (damn SEC).

Getting registered as a MSB is not SIMPLE.   That is probably the problem that most of these USA businesses have.   If you solicit or have customers in a state you must apply, register and report to that state also.   Each state is different.  So you have the federal and 50 side nannies all to approve you.   Then, you must basically have an in house lawyer full time to comply with all the guidelines and SOPs you need to prove you have in place.   I do not think people realize how complicated it is.   Go get a sunday paper and look at some of the financial institution ads and read the disclaimer on what states that product is NOT available in.....   It is not simple nor something a 24 year old can do out of their studio apartment on a whim

[Viceroy]

you are talking about a barrier to entry, not presenting an impossibility.  in fact you kind of made my point... it's not trivial but it can certainly be done.  and being second to market in the USA is going to be nearly impossible once the first player becomes registered.