Winsconin’s crowdfunding law went into effect this past June, signed into law by Governor Scott Walker. The state crowdfunding exemption allows entrepreneurs to raise up to $2 million via an online investment platform ($1 million without an audit). The law was unique in their approach to the definition of an accredited investor. Recognizing regional differences the state of Wisconsin defines an accredited investor as an individual who earns $100,000 – in contrast to the federal definition that defines the barrier as twice that amount.
Now, according to a report in the Journal Sentinel, an unexpected hurdle is being encountered by prospective crowdfunding companies. The Wisconsin law bars federally chartered banks from acting as the escrow agent and only allows state chartered banks to hold the funds during an investment crowdfunding campaign. While the intent was to boost state bank business, local banks have reportedly been cautious about getting involved.
The report states that understandably the law is expected to be amended with Representative David Craig, the bill sponsor, acknowledging the law needs to be adjusted. Wisconsin is the only state crowdfunding exemption that incorporates a requirement that state chartered banks must be utilized.
Henry Schwartz CEO of the craft brewery was quoted on the enigma;
“It has been extremely difficult to get banks to see this as something that’s new and innovative and not be scared of it”.
CraftFund, the very first site to register with the Department of Financial Institutions, is equally stymied. David Dupee the lawyer that registered the site stated simply, “It’s been pretty frustrating”.