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No significant fiscal implication to the State is anticipated.
HB 1629 would allow the Texas State Securities Board (SSB) to implement regulations concerning crowdfunding for certain nonprofit businesses. However, these regulations must:
The nonprofits that are of concern in this legislation are ones that are engaged in economic development, especially ones that receive government funding to encourage economic development. The author’s office maintains that this legislation would allow government money to be spent more efficiently.
Currently, the SSB has rules in place that apply to all crowdfunding portals. Additionally, crowdfunding is permitted in Texas only if it is done intrastate. This bill would exempt “small business development entities” from certain rules that all other crowdfunding sources must abide by. However, it would require that these entities only offer securities in their service area. This means that entities such as the Texas Veterans Commission could only give money to other veterans and no one else.
This bill does not align with our limited government principle and individual liberty principle because it protects government funded nonprofits from certain regulations that other entities must follow.
Moreover, government should not saddle itself with the responsibility of economic development. Doing so usually leads to undesirable unintended consequences. Finally we note that, economic development means the government picking winners and losers in the marketplace rather than setting up conditions that allow the free market to flourish under rules that apply equally to everyone.
For the reasons above, we oppose HB 1629.
The Senate chamber sponsor is Senator West.