Key Takeaways
- The SEC has broadened the definition of “accredited investor” to include knowledge, not just wealth
- This could allow educated but low-income individuals to invest in cryptocurrency ICOs by proving their credentials
- Comissioner Hester Peirce believes that the rules should be broadened further to include “mom and pop” investors
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The U.S. Securities and Exchange Commission has broadened the definition of “accredited investor,” a change that could allow more investors to participate in cryptocurrency ICOs and other offerings.
Why It Matters
Under U.S. regulations, only accredited investors are allowed to buy cryptocurrency from token sales and ICOs. Meanwhile, the general public can only trade any given cryptocurrency on an exchange after its ICO has concluded. In practice, this means that only wealthy investors have access to early investment opportunities.
The SEC’s new rules mean that individuals can become accredited investors by proving their “knowledge, experience, or certifications.”
However, it does not seem that everyone will be eligible to do so. A document from the SEC states that it “does not expect” that there will be significantly more eligible accredited investors than there are right now. Critics suggest that the new rules will continue to benefit members of the financial industry first and foremost.
Hester Peirce Pushes Further
Hester Peirce, the SEC’s most pro-cryptocurrency commissioner, suggests that the rules should be broadened further. “Why shouldn’t mom and pop retail investors be allowed to invest in private offerings?” Peirce wrote in a statement this week.
Americans shouldn’t have to ask the SEC for permission to invest, but today’s accredited investor rule at least offers people a path to ask permission based on their education, rather than simply telling them “no, unless you’re rich”: https://t.co/uP9zo8pVkZ
— Hester Peirce (@HesterPeirce) August 26, 2020
Peirce notes that the…
