Why ICAN Supports Raising the Reg CF Cap to $20 Million

By Mark Hiraide, Senior Legal Director & Policy Counsel at Investor Choice Advocates Network (ICAN), and a corporate/securities law partner with Mitchell Silberberg & Knupp LLP.

Investor protection rules usually start from a reasonable instinct: if something is risky, install guardrails. While limits can protect investors from risk when designed properly, too many simply keep them away from opportunity. 

Our team spends a lot of time looking at real-world outcomes and standing up for everyday investors when a rule costs them an opportunity, and we believe a better approach would preserve protection while expanding access.

That’s why on October 19, 2026, ICAN filed a letter with the SEC supporting a petition from Crowdfund Capital Advisors (File No. 4-914). The petition asks the Commission to raise the Regulation Crowdfunding offering limit—the most a company can raise under the exemption in a 12-month period—from $5 million to $20 million, and to index that limit to inflation. Reg CF is one of the few federal pathways that let non-accredited investors invest in a private company.

The offering cap limits how much a company can raise through that pathway. It is separate from the rules limiting how much any non-accredited investor can invest. Our argument is that the Commission can expand access while preserving those individual limits and Reg CF’s other safeguards.

Here’s what the analysis behind our letter showed, followed by the concerns we hear most often and how we answer them

The Cap Doesn't Stop Big Rounds. It Splits Them.

When a company needs more than $5 million, it can continue raising through another exemption. It may pair its Reg CF offering with a second offering under Rule 506(c), an exemption open only to accredited investors—including individuals who meet specified income, net-worth, or professional-qualification criteria. Under 506(c), there is no prescribed investor-disclosure package comparable to Reg CF’s, although Form D filing, accredited-investor verification, and antifraud requirements still apply. No intermediary is required.

This isn’t rare. In its July 2026 supplemental submission, Crowdfund Capital Advisors reported 323 Reg CF offerings that ran concurrent 506(c) raises totaling $422.6 million. CCA also reported that 40.3% of issuers that approached the cap returned for follow-on Reg CF offerings, with more than $214 million raised in the post-cap offerings it tracked.

Consider Levels, a metabolic health company. Its 2022 Series A was $38 million, and it opened part of that round to its own members through crowdfunding. According to Levels’ account of the round, more than 1,400 of them invested, and they hit the $5 million limit in under six hours.

Once that portion reached its ceiling, additional investments could not be accepted under Reg CF—even if prospective investors still had room under their individual investment limits. The example illustrates how the offering cap can restrict participation within a larger financing round; it does not establish that the crowdfunding investors invested at an earlier or riskier stage than everyone else.

Levels wasn’t a typical Reg CF issuer. The SEC’s 2019 staff report found that just over half of offerings came from companies with no revenue, and the median issuer was about two years old with three employees. Those findings covered the market’s earliest years. A May 2025 study by SEC economists, using data through December 2024, found that 58% of offerings involved companies with revenue, although only 14% involved companies with positive net income.sec+1

The petitioner reports that companies seeking $10 million to $20 million are often post-revenue, with established customers. Revenue and customers do not make an investment safe. But companies with those characteristics can broaden the choices available to ordinary investors.

In a split round, non-accredited investors can participate through the Reg CF portion, while the Rule 506(c) portion is available only to accredited investors. The cap therefore limits the amount of a financing round that can remain accessible to everyone—not necessarily which investors get the earliest or riskiest terms.

Raising the Cap Doesn't Raise Anyone's Exposure

Reg CF includes a separate limit on how much any non-accredited investor can put into all crowdfunding offerings in a 12-month period.

As the SEC’s issuer guidance explains, if either annual income or net worth is below $124,000, the limit is the greater of $2,500 or 5% of the greater of annual income or net worth. If both are at least $124,000, the limit is 10% of the greater of annual income or net worth, subject to a $124,000 aggregate ceiling. Accredited investors are not subject to these investment limits.

The petition doesn’t touch that rule. A non-accredited investor’s maximum permitted annual Reg CF investment would remain the same whether a company may raise $5 million or $20 million. What changes is the menu, meaning which companies that investor gets to choose among.

That does not mean investment risk is identical. Investors could make different choices, and a higher cap could change which companies enter the market. The narrower—and important—point is that raising the company-level cap would not raise any non-accredited investor’s legal annual investment limit.

Reg CF Requires a Gatekeeper in Every Offering

Regulation Crowdfunding is the only federal offering framework, exempt or registered, that requires a regulated intermediary in every single offering. Congress wrote that into the statute. Every Reg CF sale must run through a registered broker-dealer or a FINRA-member funding portal.

That intermediary has real duties. Before an offering goes live, it must have a reasonable basis to believe the issuer follows the rules. It must run background and regulatory-history checks on the company’s officers, directors, and 20% owners, and turn away bad actors. When it identifies specified fraud or investor-protection concerns, it must deny access or remove the offering and direct the return of committed funds.

It must also educate investors in plain language before accepting an investment commitment. Each investor has to acknowledge that they could lose everything and can bear that loss. The intermediary may be liable to investors as a seller of the securities, and FINRA examines its written supervisory procedures. These requirements, and their comparison with other offering frameworks, are discussed in our SEC submission.

Rule 506(b), Rule 506(c), Regulation A, and registered offerings do not universally require an intermediary as a legal condition of the offering. But they have different protections. Regulation A and registered offerings involve SEC staff review and additional statutory liability provisions; registered offerings also carry Section 11 liability.

When financing shifts from Reg CF to Rule 506(c), it leaves behind Reg CF’s mandatory intermediary and standardized disclosure requirements. Raising the cap could allow more of a round to remain within that framework.

The Commission’s Recent Commentary

On October 27, the SEC's Small Business Capital Formation Advisory Committee marked Reg CF's tenth anniversary with a discussion of where the rules go next. The SEC's top officials used the occasion to signal a fresh look.

Chairman Paul Atkins noted that more than 9,800 Reg CF offerings have occurred since the rules were adopted in 2015, raising an average of about $364,000. He stated: “I have asked Commission staff to evaluate which aspects of Regulation Crowdfunding can be amended to reduce compliance burdens and improve the rules’ attractiveness for issuers and investors.” He invited the Committee’s input. This is a clear direction to staff to examine the rules, though it focuses more broadly on compliance costs and attractiveness rather than naming the offering cap specifically.

Commissioner Mark T. Uyeda  discussed a retrospective review of the rules’ effectiveness. He specifically addressed the offering limit: the Commission raised it from $1.07 million to $5 million in 2020; participants at the Commission’s 45th Annual Small Business Forum ranked an increase to $20 million among their top recommendations. He asked: “Is the current cap limiting risk or simply splitting a single financing into several financial efforts, each with its own fees, filings, and campaign costs?” 

Noting related issues such as escalating financial-statement requirements (review vs. audit), advertising/communications restrictions, post-offering shareholder thresholds and liquidity, Commissioner Uyeda also remarked on the need for protections to scale appropriately as offering sizes grow. He emphasized that anti-fraud provisions already apply and called for views on improvements.

Common Concerns, and How We See Them

A higher cap raises fair questions, and many of them were raised when the SEC last increased the limit in 2020. Here are the ones we hear most.

"Reg CF was built for small community raises."

Most Reg CF offerings remain small. The median successful Reg CF offering reported proceeds of approximately $113,000 in the SEC economists’ May 2025 study, which covered 2016–2024. That figure applies to offerings reporting proceeds, and the study notes limitations in reporting coverage. Most issuers will never come near $5 million, let alone $20 million.

The case for a higher ceiling concerns the smaller group of companies that could use it. Allowing larger raises would give those businesses another option without requiring smaller issuers to change how much they seek.

"Bigger companies can just use Regulation A."

Some should, and nothing in the petition takes anything away from Reg A. But what companies could do and what they actually do are different things. The SEC’s 2019 staff report found that 85 crowdfunding issuers filed for a Regulation D offering after their first Reg CF raise, while only about ten had a Reg A offering qualified, before or after. Those historical findings concern Regulation D generally, not just Rule 506(c), and predate the $5 million cap.

More recent SEC economists’ research likewise finds that crowdfunding issuers use Regulation D more often than Regulation A. CCA’s data separately identify concurrent Rule 506(c) raises.

Cost is part of the reason companies may prefer other exemptions, and so is time spent waiting on SEC staff review. The evidence does not show that all financing above $5 million flows into Rule 506(c). It does show that companies use alternatives that can exclude non-accredited investors.

And $20 million isn’t an unprecedented offering ceiling: it’s the same ceiling the SEC already uses for Reg A Tier 1. The two exemptions nevertheless have different requirements and protections, as the SEC explains in its 2020 exempt-offering rulemaking.

"Retail investors will lose more money."

Early-stage investments fail often, and some crowdfunding investors will lose money. We don’t pretend otherwise. A higher offering cap could affect participation, investment choices, and aggregate losses. What it would not do is increase any non-accredited investor’s legal annual investment limit.

When the SEC raised the cap to $5 million in 2020, it concluded that the safeguards supported that increase. A move to $20 million would require the Commission to assess the proposed change and explain why it remains consistent with investor protection. The Commission’s analysis appears in its 2020 adopting release.

Offerings above $5 million would still require audited financial statements if the existing financial-statement rules remain unchanged. Those rules generally require audits above $618,000, with a higher $1,235,000 threshold for an issuer’s first Reg CF offering. An issuer behind on required annual reports would still be ineligible, as described in the SEC’s Reg CF guidance.

Our position is that the Commission should evaluate a higher limit with those safeguards intact, rather than treat the existing offering ceiling as the only way to protect investors.

"Shouldn't Congress change this number, not the SEC?"

ICAN spends much of its time arguing that the SEC must stay inside the lines Congress drew, so this is something we always consider. Our legal argument rests on Section 28 of the Securities Act. In 1996, Congress gave the SEC express authority to exempt classes of transactions, subject to specified public-interest and investor-protection findings.

The SEC relied on that authority in its 2020 rulemaking to raise the cap from $1.07 million to $5 million, and the higher limit has been in effect since March 15, 2021. The proposed increase would retain investor limits, disclosure, and a required intermediary.

In our view, Loper Bright does not remove that express grant of exemptive authority. But the existence of authority does not guarantee that any particular rule will survive judicial review. The Commission would need to make the required findings and adequately explain its reasoning. We set out that argument in our comment letter.

We aren’t asking for deference. We’re asking the SEC to use a power Congress gave it and to explain its reasoning fully when it does.

"Who actually benefits?"

Companies that want to raise a full round from their customers and communities, and investors who want a shot at more than the earliest, riskiest dollars. ICAN is a nonprofit public-interest litigation organization. Our interest in this petition aligns with our mission to expand investor choice while holding the SEC to its statutory authority.

Wealth Is a Poor Proxy for Judgment

None of this means we think there should be no rules for non-accredited investors. We believe taking away someone’s ability to invest because of their income or net worth isn’t the best way to protect them. We favor protections that address fraud and informed decision-making rather than relying primarily on financial eligibility thresholds.

That principle runs through our litigation, too. In Kapszukiewicz & Healthcare Shares v. SEC, we represent Emily Kapszukiewicz. She’s an executive officer of a startup. As described in our letter, she wanted to invest $25,000 to $35,000 in a private fund. Two separate verification services concluded she didn’t qualify, because her income and net worth fell just shy of the SEC’s lines. Her executive role did not, by itself, qualify her to invest in that unrelated fund.

For everyday investors, Reg CF is one of the few federal pathways into private markets at all, and the cap decides how much of the private market that pathway reaches. It also demonstrates a different regulatory approach: permitting non-accredited investors to participate subject to disclosure, a regulated intermediary, and individual investment limits.

The current offering cap restricts that access. We believe the Commission can expand it while retaining meaningful protections. That’s why we asked the Commission to raise the cap to $20 million and index it to inflation—giving investors more choice while preserving Reg CF’s existing individual investment limits, disclosure requirements, and mandatory intermediary safeguards.

Author Bio: Mark Hiraide is Senior Legal Director and Policy Counsel at the Investor Choice Advocates Network, a nonprofit public interest law firm serving as a voice for smaller investors and entrepreneurs. ICAN's full analysis of the Clarity Act is available at icanlaw.org.