The SEC first proposed rules in October 2013 for the crowdfunding exemption which was included in the Jumpstart Our Business Startups Act (JOBs Act) passed by Congress in 2013. The SEC has not finalized those rules as of yet although it is possible that those rules will be in place before the end of 2015.

In the meantime, state legislatures of several states, tired of waiting for the SEC to finalize rules for the national crowdfunding exemption that may be used in all 50 states, have taken it upon themselves to enact a crowdfunding exemption to be used by entities located in their home state. Virginia is the most recent state to enact legislation and now there are 20 states and the District of Columbia that include a crowdfunding exemption within their state securities law.

Generally, the state crowdfunding exemption is for offerings to an unlimited number of persons in the state provided that all offers and sales are conducted exclusively within the state, not more than $1 million (in some cases, up to $2 million) of securities are sold within a 12 month period, and a filing is made with the state administrator either before or after the commencement of the offering.

Reportedly, seven additional states are looking to enact similar legislation in 2015 in order to provide its state issuers with a crowdfunding exemption.