SEC Redefines Accredited Investors to Include Those With Proven Knowledge

The U.S. Securities and Exchange Commission (SEC) has amended the definition of accredited investors, such as to include those with proven financial knowledge. The broader definition will enable more people to invest in private offerings of cryptocurrency investments.

SEC’s New Accredited Investor Definition

The SEC announced Wednesday that it has adopted amendments to the definition of “accredited investor.” The new, broader definition will open up many cryptocurrency investments previously available only to high-net-worth individuals and institutional investors to more buyers. Grayscale Investments’ cryptocurrency products, for example, are available to accredited investors.

SEC Chairman Jay Clayton commented:

For the first time, individuals will be permitted to participate in our private capital markets not only based on their income or net worth, but also based on established, clear measures of financial sophistication.

The SEC has also “expanded and updated the list of entities, including tribal governments and other organizations, that may qualify to participate in certain private offerings,” Clayton continued.

The amendments “add a new category to the definition that permits natural persons to qualify as accredited investors based on certain professional certifications, designations or credentials or other credentials issued by an accredited educational institution, which the Commission may designate from time to time by order,” the SEC detailed. Holders in good standing of the U.S. Series 7, Series 65, and Series 82 licenses are qualifying natural persons. The SEC added that “Members of the public may wish to propose for the Commission’s consideration additional certifications, designations or credentials that satisfy the attributes set out in the new rule.”

The amendments also “include as accredited investors, with respect to investments in a private fund, natural persons who are ‘knowledgeable employees’ of the fund,” the…

Read More