On November 6, Advocacy Economist Miriam Segal spoke on a panel at AltFi’s Global Regulatory Forum in Washington, D.C. AltFi, self-described as the “world’s leading news site for the fast growing alternative finance space,” hosts a variety of events. The Global Regulatory Forum focused on opportunities presented by alternative finance and the challenges for policymakers and regulators. Alternative finance includes practices that are commonly known as crowdfunding, peer-to-peer lending, and marketplace lending. (For information on the distinction between these terms, see page 1 of the Office of Advocacy’s issue brief on peer-to-peer lending.) Previous reports by the Office of Advocacy (see here and here) have addressed regulatory issues surrounding alternative finance.
Speakers for the panel, titled “The U.S. Experience – Building a Sustainable Equity Crowdfunding Sector in the U.S.,” echoed existing concerns over regulation in the burgeoning U.S. crowdfunding sector. John Berlau, senior fellow at the Competitive Enterprise Institute, warned of over-regulation, which could make it difficult for small businesses to access capital and consequently damage overall economic growth. In response, Sara Hanks, CEO and founder of CrowdCheck, responded that the Securities and Exchange Commission filed its first complaint for crowdfunding fraud only a few weeks ago on October 13, 2015. Panelist Chance Barnett, the CEO of equity crowdfunding platform CrowdFunder, echoed the need for regulation and investor protections in the crowdfunding industry.
In many ways, the discussion on the panel was an extension of the multi-decade debate on financial regulation. However, it is difficult to make any claims for certain about the potential impact of crowdfunding on economic growth and investor outcomes due to the limited or piecemeal data on the topic. Now that the SEC has approved the final crowdfunding rules, perhaps the best thing to do is encourage the collection and accessibility of future data.