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SEC’s ‘Crypto Mom’ to Bitcoin Holders: Accredited Investor Laws Need to Change

March 10, 2019

An attendee at the 2019 MIT Bitcoin Expo on Saturday got a round of applause when he asked SEC Commissioner Hester Peirce, a panelist at the event, the following question.

“I think one of the biggest philosophical issues that many of us in crypto have with these types of regulations is around our chafing at the prohibition of retail participation. It may be hubristic, but many of us are not independently wealthy, but we still believe we can make good investment decisions. And right now we’re kind of excluded from participating. So my question is, how can we move the accredited investor laws away from wealth thresholds, and towards something that’s frankly far more reasonable and accessible to mainstream investors?”

Peirce, a crypto supporter, whom another audience member called “a true visionary at the SEC” for her work, responded to the question by asking participants at the event to share their thoughts on how to help change accredited investor guidelines.

“I love that question, and I wish that there were a lot more people like those of you in the room who are clapping. Our accredited investor rules effectively say that you have to have a certain wealth level or a certain income level in order to participate in certain types of investment products. I personally think that those rules are not consistent with what this country is about, which is about people taking opportunities, taking their talents and their intelligence, and applying it to make their lives better, and we’ve put this artificial barrier in place so people can’t do that.

If I were running the show, what I would do is, you could opt in to the securities framework, if you want to opt in, otherwise you can be outside of it. And that means you better make your own good decisions because if you make a mistake and you lose all your money, don’t come crying to me. However, I have not yet convinced my colleagues that that’s the appropriate way to go. So, to what you raised in your question, I think it’s more likely that we’ll think about ways that we can open up the accredited investor definitions so that there are other ways to show that you are able to handle investing in this area.

Again, I chafe at that myself because you worked hard to earn the money. You’re investing it. If you want to invest it in a stupid project, that’s your choice. In any event, I think that there is an appetite for opening up the accredited investor definition to make it cover more types of sophistication. So, again, if you all have thoughts about what that would look like, let me know what you think the right criteria are.”

Peirce has been a strong supporter of regulations that will protect consumers, honor investors’ personal decisions and bring crypto products to market. Remarking on last year’s rejection of the Winklevoss Bitcoin ETF proposal, Peirce said she believes the SEC went beyond its statutory authority, and that the Commission should have allowed it to trade.

You can watch the full session here.

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