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Something potentially revolutionary is going on in the capital markets. Not since the Internet Bubble of the late 1990s has there been such growth in new ways of raising money, coupled with such widespread public interest in new financial products.

It began with crowdfunding. 1 Entrepreneurs of all kinds realized they could use the Internet to appeal directly to investors or even their customers. This realization created a new market for funding ideas: the crowd. And while the market boomed for a bit, there were no clear and stable rules. The securities laws in place were, and still are, a product of the 1930s. Even though the laws have been continuously updated by the Securities and Exchange Commission (" SEC") through rulemaking and guidance, this new approach to fundraising did not fit neatly into the regulatory scheme. The whole point of crowdfunding was to find a less expensive way of raising money. Forcing …