U.S. regulators are poised to reduce the states' powers to police some public stock deals, a move that advocates say will spur more capital-raising and critics claim could lead to more fraud.

In a public meeting on Wednesday, the Securities and Exchange Commission will vote on a new rule set for mini public stock offerings filed through a process known as "Regulation A."

The final rule would preempt state "blue sky laws" for stock deals valued at more than $20 million and up to $50 million, meaning those companies would not have to register their deals in every state before they can be sold.

However, companies using these larger "Reg A" deals would facing heftier disclosure rules and be required to file audited financial statements and routine financial reports.

Smaller Reg A stock deals between $5 and $20 million would still face state-level reviews where they are sold.

Companies doing these smaller deals can opt out of a state-level review, but then they would be subject to the stricter disclosure rules.

The final rule by the SEC aims to try and strike a compromise with the North American Securities Administrators Association, which has been lobbying fiercely to protect its oversight powers and has urged the federal agency not to pre-empt any of the deals from state oversight.

Originally, the SEC had proposed preempting deals larger than $5 million.

Wednesday's rule is one of the few remaining regulations that the SEC has to complete under the Jumpstart Our Business Startups (JOBS) Act, a 2012 law that relaxed securities rules for smaller companies to help them raise money and go public.

Regulation A was originally put in place to help smaller companies raise up to $5 million by exempting the securities from registration and allowing companies to file paperwork with fewer audit requirements and disclosures.