• Latest
Closer Look at SEC ‘Accredited Investor’ Revamp Suggests Little Will Change

Closer Look at SEC ‘Accredited Investor’ Revamp Suggests Little Will Change

January 6, 2020
6 Questions for Rene Reinsberg of Celo – Cointelegraph Magazine

6 Questions for Rene Reinsberg of Celo – Cointelegraph Magazine

March 31, 2023
Judge denies SEC motion to keep Hinman docs secret in Ripple case

Judge denies SEC motion to keep Hinman docs secret in Ripple case

March 31, 2023
The ultimate guide to Miami – Cointelegraph Magazine

The ultimate guide to Miami – Cointelegraph Magazine

March 31, 2023
Dr. Jane Thomason – Cointelegraph Magazine

Dr. Jane Thomason – Cointelegraph Magazine

March 31, 2023
1658007797 celsius is bankrupt with 12b balance sheet hole su zhu.jpg

Celsius is bankrupt with $1.2B balance sheet hole, Su Zhu returns to Twitter and OpenSea purges 20% of employees: Hodler’s Digest, July 10-16

March 31, 2023
6 Questions for Lisa Fridman of Quadrata – Cointelegraph Magazine

6 Questions for Lisa Fridman of Quadrata – Cointelegraph Magazine

March 31, 2023
Jed McCaleb empties XRP wallet after eight-year selloff

Jed McCaleb empties XRP wallet after eight-year selloff

March 31, 2023
Celsius has finally filed for bankruptcy: Law Decoded, July 18-25

Celsius has finally filed for bankruptcy: Law Decoded, July 18-25

March 31, 2023
The ‘godfather of crypto’ risked lifetime in jail, laying foundation for Bitcoin – Cointelegraph Magazine

The ‘godfather of crypto’ risked lifetime in jail, laying foundation for Bitcoin – Cointelegraph Magazine

March 31, 2023
SEC objects to XRP holders aiding Ripple defense

SEC objects to XRP holders aiding Ripple defense

March 31, 2023
Blockchain technology is transforming the real estate market – Cointelegraph Magazine

Blockchain technology is transforming the real estate market – Cointelegraph Magazine

March 31, 2023
1658612147 nfts banned in minecraft sec lists 9 tokens as securities.jpg

NFTs banned in Minecraft, SEC lists 9 tokens as securities and 3AC founder blames cockyness for company meltdown: Hodler’s Digest, July 17-23

March 31, 2023
  • Home
  • Coin Market Cap
  • Bitcoin
  • Ethereum
  • Ripple
  • Litecoin
  • Alt Coin
  • Business
  • Trading
  • Mining
CoinNewsDaily
  • Home
  • Coin Market Cap
  • Bitcoin
  • Ethereum
  • Ripple
  • Litecoin
  • Alt Coin
  • Business
  • Trading
  • Mining
No Result
View All Result
  • Home
  • Coin Market Cap
  • Bitcoin
  • Ethereum
  • Ripple
  • Litecoin
  • Alt Coin
  • Business
  • Trading
  • Mining
No Result
View All Result
CoinNewsDaily
No Result
View All Result
Home Tech

Closer Look at SEC ‘Accredited Investor’ Revamp Suggests Little Will Change

coinnewsdaily by coinnewsdaily
January 6, 2020
in Tech
0
Closer Look at SEC ‘Accredited Investor’ Revamp Suggests Little Will Change
190
SHARES
1.5k
VIEWS
Share on FacebookShare on Twitter

Related articles

Bankman-Fried faces down roomful of futures industry insiders at CFTC roundtable

Bankman-Fried faces down roomful of futures industry insiders at CFTC roundtable

May 25, 2022
Central African Republic to launch official crypto hub ‘Sango’

Central African Republic to launch official crypto hub ‘Sango’

May 24, 2022

For the first time in nearly 40 years, the U.S. Securities and Exchange Commission is lowering the barriers to investing in private securities. How much lower is unclear, however.

Three of the five SEC commissioners voted to publish a proposal for updating the definition of “accredited investors,” a category of individuals and institutions that are allowed to take part in private financial markets, on Dec. 18. The general public has 60 days from the proposal’s publication in the Federal Register (the official record for the U.S. government) to comment on whether the securities regulator should approve the expanded definition. 

The proposal was lauded by many in the cryptocurrency community, who hoped the new definition would allow individuals to participate in unregistered token offerings based on how well they understand the products, not arbitrary standards of wealth.

However, though the proposal lists a number of criteria and considerations that the SEC is evaluating, the final expanded definition might not widen the pool of new accredited investors all that much, industry lawyers said. 

“So far it appears that this expansion of accredited investor status is mostly applicable to Wall Street insiders such as licensed brokers or ‘knowledgeable employees’ of private investment funds,” said Zachary Kelman, a partner at Kelman Law. “It’s not as expansive as people would like to think.”

While the proposals look promising, “as in all things, the devil is in the details,” said Drew Hinkes, general counsel at Athena Blockchain and an attorney with Carlton Fields.

The text provides a tentative framework for which credentials from academic institutions would qualify, including an examination or series of exams administered by a self-regulatory organization. 

That part “could have a massive impact,” Hinkes said.

But according to the full text of the proposal, the SEC would have to designate the specific certifications, designations or credentials that would qualify an investor. 

“Does that mean anyone with a four-year degree from an accredited university, which would probably include millions of new investors, or is it limited to Ph.D.s, which would probably not be material?” Hinkes said. “We’ll find out when we get more details from the Commission. For now, it’s promising but not yet actionable.”

The proposal

The SEC proposal touches on recommendations stretching over a decade, with some of the amendments stemming from a 2015 report and others reaching as far back as 2007.

Some $1.7 trillion was raised in 2018 in Rule 506 offerings, including equity and debt, compared to $1.4 million raised in registered offerings, the text said, indicating significant demand for these types of exempt offerings. 

“We are mindful that an overly broad definition could potentially undermine important investor protections and reduce public confidence in this vital market,” the proposal said. “At the same time, an unnecessarily narrow definition could limit investor access to investment opportunities where there may be adequate investor protection given factors such as that investor’s financial sophistication, net worth, knowledge and experience in financial matters, or amount of assets under management.”

Commissioner Hester Peirce said an investor’s sophistication – that is, their understanding of the markets they’re investing in – should be used to determine accreditation status. 

“Our current definition includes investors that spend their days cruising around in a Ferrari that Daddy bought them, yet excludes investors whose weeks are spent earning money and weekends are spent figuring out how best to invest it,” she said in a statement. 

However, Commissioner Allison Lee, who voted against the proposal, said in a statement that the proposal could create some “serious risk to retail investors,” citing elderly individuals and retirees as examples.

Similarly, Christopher Gerold, president of the North American Securities Administrators Association, said the proposal could expose retail investors “to the significant potential harms associated with unregistered, illiquid offerings” with no ongoing disclosures.

The proposal “offers several changes to the definition, but few if any improvements, and clearly misses an opportunity to provide meaningful reform to this outdated standard,” he said.

Historical context

While expanding the definition of “accredited investor” to include more individuals and entities is widely being hailed, the framing of the conversation online has largely ignored the term’s historical context, Kelman said.

Under current law, an accredited investor is an individual with $1 million in assets or at least $200,000 in annual income; a married couple with at least $300,000 in annual income; banks, savings or loan institutions defined under the Securities Act of 1933; brokers or dealers defined under the Securities Exchange Act of 1934; investment companies registered under the Investment Company Act of 1940; licensed small businesses; state plans with at least $5 million in assets; employee benefit plans with at least $5 million in assets; or a few other entities. 

Historically, the status was granted to the wealthy as “a function of practicality rather than privilege,” Kelman said.

“The exemption for wealthy investors is premised on their financial latitude to lose their shirt without posing systemic risks such as bank runs and financial crises,” he said.

To be clear, Kelman said the proposal “represents a step in the right direction,” but treating it as a question of accessibility rather than systemic risk ignores that the concept of an “accredited investor” (if not the specific term itself) was created in the wake of the Great Depression.

“In my view, shifting the premise of the accredited investor status from ‘systemic risk mitigator’ into ‘investor IQ test’ raises a question as to why investors need SEC protection at all,” he said.  

Indeed, Peirce said the move “takes some important first steps” in updating the definition by factoring in “an investor’s actual sophistication,” rather than finances. 

Likewise, Commissioner Elad Roisman appeared to support moving away from the historical approach, calling wealth a “crude measure” of an investor’s ability to make decisions about which markets they participate in.

“I doubt that even the Commission who first adopted Regulation D would argue that they came up with perfect criteria for who should qualify as an accredited investor,” he said. “Did anyone consider the outcome that only the wealthiest Americans would have access to investments that would have the most upside for growth over time?”

Disclosure Read More

The leader in blockchain news, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups.

Credit: Source link

Tags: Crypto Tech
Share76Tweet48
Previous Post

How Libra Failed, and How It Could Succeed in 2020

Next Post

We Still Don’t Know Bitcoin’s Real Volume

coinnewsdaily

coinnewsdaily

CoinNewsDaily.com is an online Crypto Coin News Website that aims to provide latest trendy news from market and around the world.

Related Posts

Bankman-Fried faces down roomful of futures industry insiders at CFTC roundtable
Tech

Bankman-Fried faces down roomful of futures industry insiders at CFTC roundtable

May 25, 2022
Central African Republic to launch official crypto hub ‘Sango’
Tech

Central African Republic to launch official crypto hub ‘Sango’

May 24, 2022
South Korean police request exchanges freeze LFG related funds
Tech

South Korean police request exchanges freeze LFG related funds

May 24, 2022
Bitcoin stands apart from other crypto, and what that means for US public policy
Tech

Bitcoin stands apart from other crypto, and what that means for US public policy

May 22, 2022
Needed: A massive education project to fight hacks and scams
Tech

Needed: A massive education project to fight hacks and scams

May 21, 2022
Commonwealth Bank puts crypto trading trial on ice as regulators dither
Tech

Commonwealth Bank puts crypto trading trial on ice as regulators dither

May 20, 2022
Load More
Next Post
We Still Don’t Know Bitcoin’s Real Volume

We Still Don't Know Bitcoin's Real Volume

Categories

  • Alt Coin
  • Bitcoin
  • Business
  • Ethereum
  • ICO
  • Litecoin
  • Mining
  • NFT
  • Ripple
  • Tech
  • Trading

What New here?

  • 6 Questions for Rene Reinsberg of Celo – Cointelegraph Magazine
  • Judge denies SEC motion to keep Hinman docs secret in Ripple case
  • The ultimate guide to Miami – Cointelegraph Magazine
  • About Us
  • Contact Us
  • Privacy & Policy

© 2018-2021 CoinNewsDaily.com by CoinNewsDaily Inc. Crafted with Love by iFtiDev

No Result
View All Result
  • Home
  • Coin Market Cap
  • Bitcoin
  • Ethereum
  • Ripple
  • Litecoin
  • Alt Coin
  • Business
  • Trading
  • Mining

© 2018-2021 CoinNewsDaily.com by CoinNewsDaily Inc. Crafted with Love by iFtiDev

  • bitcoinBitcoin(BTC)$28,433.00-0.17%
  • ethereumEthereum(ETH)$1,816.75-0.70%
  • tetherTether(USDT)$1.000.09%
  • binancecoinBNB(BNB)$314.95-0.71%
  • rippleXRP(XRP)$0.51-5.00%
  • cardanoCardano(ADA)$0.395543-1.86%
  • dogecoinDogecoin(DOGE)$0.0822577.67%
  • matic-networkPolygon(MATIC)$1.10-0.86%
  • solanaSolana(SOL)$20.960.04%
  • polkadotPolkadot(DOT)$6.28-0.84%
  • shiba-inuShiba Inu(SHIB)$0.0000115.82%
  • litecoinLitecoin(LTC)$92.332.95%
  • tronTRON(TRX)$0.0663370.44%
  • daiDai(DAI)$1.00-0.03%
  • chainlinkChainlink(LINK)$7.50-1.70%
  • cosmosCosmos Hub(ATOM)$11.300.83%
  • leo-tokenLEO Token(LEO)$3.39-2.28%
  • ethereum-classicEthereum Classic(ETC)$21.111.94%
  • stellarStellar(XLM)$0.109317-1.09%
  • moneroMonero(XMR)$155.18-1.37%
  • okbOKB(OKB)$41.56-0.73%
  • bitcoin-cashBitcoin Cash(BCH)$125.691.14%
  • filecoinFilecoin(FIL)$5.771.77%
  • crypto-com-chainCronos(CRO)$0.068884-0.28%
  • vechainVeChain(VET)$0.023360-0.27%
  • algorandAlgorand(ALGO)$0.222177-0.72%
  • internet-computerInternet Computer(ICP)$5.21-0.59%
  • eosEOS(EOS)$1.18-1.58%
  • theta-tokenTheta Network(THETA)$1.073.71%
  • elrond-erd-2MultiversX(EGLD)$42.31-0.57%
  • aaveAave(AAVE)$74.021.00%
  • tezosTezos(XTZ)$1.130.20%
  • neoNEO(NEO)$12.35-1.36%
  • havvenSynthetix Network(SNX)$2.541.40%
  • paxos-standardPax Dollar(USDP)$1.000.01%
  • bitcoin-cash-svBitcoin SV(BSV)$35.93-0.23%
  • pancakeswap-tokenPancakeSwap(CAKE)$3.730.84%
  • dashDash(DASH)$58.801.07%
  • makerMaker(MKR)$691.240.37%
  • iotaIOTA(MIOTA)$0.2221413.48%
  • huobi-tokenHuobi(HT)$3.650.04%
  • zilliqaZilliqa(ZIL)$0.0308675.97%
  • basic-attention-tokenBasic Attention(BAT)$0.2730312.45%
  • zcashZcash(ZEC)$37.72-3.66%
  • nemNEM(XEM)$0.0403551.31%
  • Elrond ERDElrond ERD(ERD)$0.0259290.00%
  • qtumQtum(QTUM)$3.130.47%
  • kusamaKusama(KSM)$33.75-3.83%
  • compound-governance-tokenCompound(COMP)$43.210.65%
  • yearn-financeyearn.finance(YFI)$8,714.780.02%
  • bitcoin-goldBitcoin Gold(BTG)$16.110.67%
  • ftx-tokenFTX(FTT)$1.89-21.50%
  • golemGolem(GLM)$0.2457962.02%
  • omisegoOMG Network(OMG)$1.56-2.02%
  • wavesWaves(WAVES)$2.130.63%
  • ontologyOntology(ONT)$0.2411262.78%
  • sushiSushi(SUSHI)$1.09-1.24%
  • digibyteDigiByte(DGB)$0.0097511.25%
  • umaUMA(UMA)$2.142.75%
  • ethlendAave [OLD](LEND)$0.53-3.08%
  • UniswapUniswap(UNI)$2.4438.80%