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PRODUCT crowdfunding is stuff like Kickstarter and Indiegogo where you pay in advance for the GOOD or SERVICE. Product crowdfunding is alive and well and totally legal under current rules. EQUITY crowdfunding is when a company offers the chance to buy a chunk of ownership in the company to the public. At the moment it is not currently permitted except (i) to accredited investors or (ii) solely inside of a given state if you are in a state where it is permitted. The SEC may broaden that, but their rules will include disclosure, limits and other investor protections.

The SEC has not spelled out specific rules. Instead they have laid out a \\\"principles based approach\\\" where, in effect, you can decide what the right level of proof is based on the situation. They have laid out some safe harbors such as showing your tax returns, getting a letter from your lawyer, tax person, or financial advisor, etc., but those are not required. It is up to the company to decide whether they have done enough. Couple side notes: the Angel Capital Association has created an \\\"Established Angel Group\\\" certification which allows companies to rely on EAG status as proof, which makes it much easier to certify angel investors in those groups. Also, there are now vendors coming into the market offering to do it for a fee. And some of the crowdfunding platforms already help or hope to be able to help investors on their platforms with certification.

Many think that the rules will come out in mid to late 2015, but I think that might be optimistic. I was in a meeting with an SEC commissioner recently, and it really felt like she was talking very much in the future tense - I would not be surprised if they took well into 2016 to publish rules. They are very concerned about market integrity, investor protection and preventing fraud - they have not cracked that nut yet, so the rules might take a while.