Crowdfunding and Crowdlending in the US: Regulations, Exemptions, and Outcomes

Abstract

This is a chapter in a forthcoming comparative volume of essays on the legal aspects of crowdfunding, which in the US emerged into an environment of longstanding and heavy regulation of public investment solicitation (securities regulation). Existing rules inhibited fintech’s broad outreach to both equity and debt investors. The most recent revisions to facilitate crowdfunding still inhibit the expansion of crowdlending with fairly onerous fundraising limits and registration and reporting requirements. This has not depressed the robust expansion of the fintech lending sector, but it has largely prevented the expansion of true crowdlending beyond a couple of prominent platforms. As a result, most fintech lending in the US today is funded by a limited number of non-bank institutional investors, or increasingly by banks themselves, rather than through broad appeals from the cloud to the crowd.