Americans desperate to get involved in cryptocurrency could potentially find themselves rejoicing after the Securities and Exchange Commission (SEC) voted to propose amendments to the definition of an accredited investor. Currently, potential investors of any security must fulfil certain criteria pertaining to their level of wealth, but the SEC this week decided to look at what constitutes an accredited investor with a view to “modernizing” the criteria.
One of the reasons cryptocurrency is so popular in America is because it represents one of the few ways in which anyone, regardless of their social status or the size of their bank account, can invest in an asset and make potentially life changing sums of money.
When it comes to ICOs/STOs however, the SEC is very strict on who can and can’t participate, judging that those who do not have accredited investor status are not financially astute enough to make informed decisions about where to invest. Currently, your investment fitness test relies on you having at least $1 million in assets (excluding your primary residence), or a salary of at least $200,000 per year. Worked your way up on a trading desk for years and bringing in $195,000 per year? Sorry. Clueless heiress to a million-dollar inheritance? In you come!
SEC Looks to the Future
The absurdity of the current ruling has finally been appreciated by the SEC, and, in a rare show of forward thinking, Chairman Jay Clayton announced Wednesday that the commission would be looking at bringing the criteria up to date:
The current test for individual accredited investor status takes a binary approach to who does and does not qualify based only a person’s income or net worth. Modernization of this approach is long overdue. The proposal would add additional means for individuals to qualify to participate in our private capital markets based on established, clear measures of financial sophistication.
The SEC still won’t be able to stop you getting rekt on a worthless ICO, but at least you might find that, at last, you are legally allowed to lose everything!
