Patricia H. Lee

Document Type




To illustrate the findings, this Article proceeds like so. Part I provides a brief history of the Reg. CF exemption law and the research findings about investment crowdfunding, generally, and digital tokens, more specifically. Next, Part II provides insights on the current state of offering blockchain-based digital tokens to unsophisticated investors and the silver linings in the data. Finally, Part III provides recommendations for a path forward in Reg. CF. First, the SEC should re-evaluate its regulatory policy in light of the proliferation of blockchain-based token offerings and gaps in funding portals, and provide additional warnings to unsophisticated investors who may be taking on enhanced investment risk. The uncertainty and risk of digital tokens reliant on blockchain technology foretells a troubling high risk of investment loss, which may supplement the expected high risk of loss for startup tech companiees. Second, companies, particularly idealistic tech startups, that are considering the offer of digital tokens, should thoughtfully consider alternatives to these offerings. There remains a level of uncertainty and risk in these offerings, which could result in greater risk and liability than the alternative financing available to them. Lastly, economic development organizations should consider developing their role in attracting, designing, and implementing funding portals to provide the support that tech and other startup companies need to raise capital for their business.



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