Were you worried about the potential for fraud in crowdfunding? No? Neither was anybody else. But apparently it’s a real issue, at least to our fine Senate, because they just passed the CROWDFUND Act with an overwhelming majority.
What does it do? Limits crowdfunding!
Yeah, the CROWDFUND Act seems a bit tone-deaf: it limits crowdfunding to $1 million per year per business, and also caps how much investors can contribute based on their income, with some people only able to contribute $2000.
To be fair, the bill does resolve a major issue in crowdfunding: letting the guy on the street invest in a business for a share of it. Under current law, only an accredited investor can do that: your average joe can only kick in small amounts and get small rewards back, which is why Kickstarter is legal. This law would let you invest in companies independently.
So it’s a big step forward and a little step back for the Internet. Well, at least it’s not SOPA.
(Image courtesy Cornell University on Flickr)