Major players in the crypto community have responded to the U.S. Securities and Exchange Commission recently amending its definition of an “accredited investor”. While many gave positive feedback, some say the new rules don’t go far enough.
On Aug. 26 the SEC announced that the accredited investors definition would now be based on “professional certifications, designations or credentials, or other credentials issued by an accredited educational institution.” Under the old definition, accredited investors needed to have either $1 million in net worth or a stable income of at least $200,000 per year.
This SEC rule has been under scrutiny in the crypto community for some time, as expanding the category opens the doors to many more people to invest in security token offerings, among other opportunities in the digital asset ecosystem.
Many prominent figures were quick to praise the decision including Gemini co-founder Tyler Winklevoss.
Kudos to the SEC for acknowledging that a penniless GenZ’er can be just as sophisticated an investor as a Wall Street Boomer. Wealth does not equal investment acumen, just look at how the Wall Street “experts” missed the #Bitcoin rocket ship. https://t.co/tDpeyfjEQ8— Tyler Winklevoss (@tylerwinklevoss) August 26, 2020
Zcoin founder Poramin Insom said the change would positively affect future security token offerings by potentially offering greater inclusion. “It will allow additional investors to pour into this essential market, helping smaller projects get off the ground,” he said.
Trading platform Uphold chief revenue officer Robin O’Connell said:
It's great to see that the regulators are adapting. It allows for increased opportunity and access to investments that were previously just offered to the privileged few.
Not everyone was so impressed and some called for the agency to clarify how many investors will meet the new definition, which includes those “based on established, clear measures of financial sophistication.” Typically, financial sophistication refers to investors with a high net-worth and extensive experience in markets, but the SEC’s use of the term is still unclear.
“They are finally incorporating knowledge and sophistication, rather than net worth,” said Bitcoin (BTC) educator Anthony ‘Pomp’ Pompliano. “This is a step in the right direction but we need even greater access and broader rules.”
Celsius Network CEO Alex Mashinsky sai:
“99% of the population has been excluded from getting access to the best innovation this country has to offer, so the question now is whether the regulators will require accreditation for retail users to do what they already do or will the SEC let what is going on continue.”