Selling your shares after the mandatory 12-month hold. How it works. What you can expect.
After you hold a share for 12 months, you can sell it to another investor via Artist Exchange's secondary market.
This is how early investors exit. If an artist has grown significantly, you might have bought in at $0.40 and sell at $2.80, locking in a 6x return. Or if an artist stalls, you might cut losses and move capital elsewhere.
This is a legal requirement under Regulation CF. No exceptions.
Holding period starts
When your investment closes (funding goal is hit and you own shares)
Can sell starting on Day 365
Exactly 12 months after ownership begins, shares unlock. You can list them for sale immediately.
Why 12 months? The SEC requires this as investor protection. It prevents flipping and ensures investors think long-term.
In your Artist Exchange dashboard, view your holdings. Any shares that have passed their 12-month mark show a 'Sell' button.
You choose the asking price per share. The current market price is shown for reference. You can ask more (optimistic), less (quick exit), or match the market.
Your order goes live on the secondary market. Other investors can see it in the 'Available shares' section of that artist's page.
A buyer either matches your price or you wait. If you are impatient, you can lower the price. If no one buys at any price, the listing sits (or you cancel it).
When a buyer agrees to your price, the trade settles instantly. Shares transfer to buyer. Cash transfers to your account.
Share price on the secondary market reflects real supply and demand between investors. It can be higher or lower than the initial issuance price.
Artist has exploded
Monthly listeners grew 50x. Early investors sell at huge premiums. New investors still buy (betting on more growth).
Artist stalled
No new releases. Streams declining. Early investors cut losses. Secondary price reflects lower expected payouts.
Artist steady
Consistent growth. Modest secondary appreciation reflects accumulated goodwill and distributions received.
Market-wide collapse
Widespread crypto crash or music-industry recession. Investors fleeing risk. Prices across all artists tank.
Artist Exchange takes a small commission on secondary trades to fund the platform.
Seller fee
Charged on your sale proceeds
Buyer fee
Added to the buyer's cost
Example: You sell 100 shares at $1.00 each for $100. Artist Exchange takes 2% ($2). You receive $98. A buyer pays $102 ($100 + 2% fee).
Popular artists (1M+ listeners, strong earnings) may trade briskly. Obscure artists may have few or no buyers at any price. You might not be able to exit quickly or at a good price.
On day 365, secondary trading opens for an artist. If the artist just got a major feature or bad news drops, price can swing 50% in a day based on new buyer/seller sentiment.
Unlike stock exchanges, there is no central order book. Buyers post bids, sellers post asks. The 'spread' (gap between highest bid and lowest ask) can be wide on small-volume artists.
You set a price and wait. Artist Exchange matches buyers and sellers automatically when prices agree. Partially filled orders are supported.
You can only sell shares you own. No shorting or margin trading. This protects the ecosystem from pump-and-dump schemes.
Artist Exchange currently operates under Reg CF (up to $5M per offering per year).
Once the platform scales, we will graduate to Reg A+ Tier 2 (up to $75M per offering per year). This enables:
Reg A+ approval typically takes 4-6 months. We will migrate existing artists and shares automatically. Your holdings remain unchanged.
When you sell shares on the secondary market, you owe capital gains tax.
Capital gain
Profit = Sale price minus your original investment. Example: bought at $0.50 ($50 for 100 shares), sold at $2.00 ($200 for 100 shares) = $150 gain.
Long-term vs short-term
Hold over 1 year = long-term capital gains (usually 15-20% tax). Hold less than 1 year = short-term (taxed as ordinary income, higher rate). Since Reg CF requires 12-month hold, most sales are long-term.
Losses are deductible
If you sell at a loss ($50 buy, $20 sell = -$30), you can offset gains or deduct up to $3,000 per year from ordinary income (excess carries forward).
Keep records
Track cost basis (what you paid), sale price, and sale date for every transaction. Artist Exchange provides statements, but keep your own records too.