The Financial Innovation and Technology for the 21st Century Act (FIT21) incorporates a Digital Asset Exemption that enables issuers to raise up to $75 million.
The current language allows participation by both Accredited and Non-Accreditd Investors.
For individuals who are not Accredited, there are limitations, including that the unit of a digital asset purchased in such transaction does not exceed the greater of:
“(i) 10 percent of the person’s annual income or joint income with that person’s spouse or spousal equivalent; or
“(ii) 10 percent of the person’s net worth or joint net worth with the person’s spouse or spousal equivalent;
There are other restrictions to the exemption. Issuers must be established in the United States.
An issuer is required to provide information on the offering including ongoing disclosures as well as annual and semi-annual reports. The usage of the funds must be itemized.
There are also rules for the secondary trading in digital assets. In effect, the legislation is a form of online capital formation or crowdfunding. Ranking Minority member of the House Financial Services Committee Maxine Waters hammered this aspect of the legislation as providing fewer restrictions than existing exemptions. She has also described the legislation as convoluted and highly confusing in regards to determining when a digital asset is a security.
