Crowdfunding Intermediary Compliance: Broker-Dealer vs Funding Portal

If you want to operate a Regulation Crowdfunding platform, you have two registration paths: become a registered broker-dealer and FINRA member, or register with the SEC as a funding portal on Form Funding Portal. The choice is not cosmetic. Funding portals face activity limits, and crossing those limits means you must register as a broker-dealer instead.

This article summarizes the SEC’s small entity compliance guide for crowdfunding intermediaries. It explains who the guide covers, the two intermediary types, the portal restrictions, and the membership requirement. It also flags what the guide does not resolve, so you know which questions need the adopting release or separate registration guidance.

Who the guide is for

The guide is intended for crowdfunding intermediaries, defined as registered broker-dealers and funding portals. It summarizes and explains the substantive requirements for those intermediaries, not for issuers. For issuer requirements, the SEC points readers to a separate Small Entity Compliance Guide for Issuers.

The underlying rules were adopted by the SEC in 2015. They permit companies to offer and sell securities through crowdfunding in reliance on the exemption under Section 4(a)(6) of the Securities Act of 1933. The rules implement Title III of the Jumpstart Our Business Startup (JOBS) Act, which added Sections 4(a)(6) and 4A to the Securities Act and Sections 3(h) and 12(g)(6) to the Securities Exchange Act of 1934.

The platform requirement

To rely on the Regulation Crowdfunding exemption, an issuer must conduct its offering exclusively through an online platform operated by an intermediary. That intermediary must be registered either as a broker-dealer or as a funding portal. The guide states this as a condition of the exemption, not as a suggestion.

That means the intermediary sits between issuers and investors, and the platform must be operated by a registered entity. The guide does not describe platform technology standards or investor onboarding mechanics in the excerpt reviewed here.

Broker-dealer path

If you are a registered broker-dealer and a member of FINRA, you do not need to submit an additional registration form with the SEC to engage in crowdfunding. The existing broker-dealer registration covers the intermediary role.

This path may suit firms that already have broker-dealer infrastructure and want to add crowdfunding offerings. The guide does not compare the operational burden of the two paths, so firms should assess that against their own business model.

Funding portal path and its limits

If you are not registered as a broker-dealer, and do not intend to register as one, but wish to act as a crowdfunding intermediary, you must register with the SEC as a funding portal on Form Funding Portal. A funding portal is a crowdfunding intermediary that can engage in only limited activities under Section 304(b) of the JOBS Act and Exchange Act Section 3(a)(80).

The guide lists specific prohibitions. A funding portal cannot solicit purchases, sales, or offers to buy the securities offered or displayed on its platform. It cannot compensate employees, agents, or other persons for such solicitation or based on the sale of securities displayed or referenced on its platform. It also cannot hold, manage, possess, or otherwise handle investor funds or securities.

These limits are structural. If you engage in, or plan to engage in, any of these activities, you must register as a broker-dealer rather than as a funding portal to act as an intermediary in crowdfunding transactions.

Comparison at a glance

Question	Broker-dealer intermediary	Funding portal intermediary
SEC registration needed to crowdfund?	No additional SEC registration form if already registered and FINRA member	Must register with the SEC on Form Funding Portal
Can solicit purchases or offers to buy platform securities?	Not addressed as a portal prohibition in the guide	Cannot solicit purchases, sales, or offers to buy
Can compensate for solicitation or based on sales?	Not addressed as a portal prohibition in the guide	Cannot compensate employees, agents, or others for such solicitation or based on sales
Can hold investor funds or securities?	Not addressed as a portal prohibition in the guide	Cannot hold, manage, possess, or otherwise handle investor funds or securities
National securities association membership	All crowdfunding intermediaries must become a member of a registered national securities association	All crowdfunding intermediaries must become a member of a registered national securities association

The table reflects the guide’s statements about funding portal limits and the general membership requirement. It does not establish that broker-dealers are free of other conduct rules outside this guide.

Membership requirement

In addition to registering with the SEC, all crowdfunding intermediaries must also become a member of a registered national securities association. The guide states this as a general requirement for both broker-dealers and funding portals.

Practical checklist for a would-be intermediary

• Confirm whether the planned activity includes solicitation, sales-based compensation, or handling investor funds or securities. If yes, the guide indicates broker-dealer registration is required.
• If you are already a registered broker-dealer and FINRA member, check whether any additional SEC form is needed for crowdfunding. The guide says no additional registration form is required.
• If you are not a broker-dealer, plan to register with the SEC as a funding portal on Form Funding Portal.
• Plan membership in a registered national securities association for either path.
• Review the adopting release for Regulation Crowdfunding for compliance and registration details beyond the guide’s summary.

What the source does not say

The guide does not provide a cost estimate, processing timeline, or approval probability for either registration path. It does not describe the full conduct rules for broker-dealers acting as crowdfunding intermediaries. It does not explain how funding portals should structure escrow or payment processing to avoid handling investor funds, beyond stating the prohibition. It does not cover issuer disclosure obligations, investor limits, or offering caps. It also does not state whether a funding portal may use third-party service providers for functions it cannot perform itself.

Those questions fall outside the guide’s stated purpose of summarizing substantive requirements for intermediaries. Readers should treat the guide as a starting point and consult the adopting release and separate registration guidance for operational detail.

Sources

• sec.gov