No, this is not crypto!

We’ve heard from some of our clients that potential investors are getting spooked by the crypto winter and the FTX meltdown.

Yes, you can invest in crypto online, just like you can invest in online exempt public offerings under Regulations A, CF and D. But that’s pretty much where the similarity ends.

There are a number of differences between the crypto world and online exempt securities offerings.
These include the types of investments offered. Crypto comprises purely digital assets, which may be in various stages of development, may or may not work, may or may not have value and in some cases may vanish overnight if investors lose confidence in them.

The sort of investments we deal with might be shares in startup companies, fractional interests in hard assets such as buildings, sneakers or diamonds, or soft assets such as music royalties. The level of risk varies (and some of the startups might be very risky) but these are “real world” things people are investing in.

Another difference is the fact that our industry operates under established rules. As everyone knows, there is a debate with respect to whether and how and by whom crypto should be regulated. Our industry is regulated by the SEC, under rules that have been around for a few years now. Regulation A offerings are reviewed by the SEC. Although we can’t say – literally we can’t say this – that review provides any measure of approval by the SEC, there is a measure of comfort that many investors get from that knowledge. And although the SEC doesn’t review Regulation CF offerings, they must be sold through a registered intermediary, and done in compliance with detailed disclosure rules, with those disclosures filed with the SEC.

And diligence! In a crypto offering, you might not have any idea who has developed the digital asset or how it’s protected. Yes, you might be able to review the code on Github, but can you read code? If I can boast for a moment, if you invest in an offering that includes a CrowdCheck diligence report, you can have confidence that the startup exists, that the building is owned by the people that are selling interest in it, that the sneakers are stored where the offering sponsors say they are, and that the diamonds have the clarity that the sponsors claim.

So please don’t confuse our industry with those other guys!

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