The SEC and equality
My friend is relatively new to crypto and he wanted to put some money into an ICO he found because it was a market he was very familiar with and sort of grasped the concept quickly and thought it was a good idea. He then went to look into how to purchase it and found out it cannot be purchased in the US unless you registered as an "accredited investor".
Here is what the SEC says about being an accredited investor.
"An accredited investor, in the context of a natural person, includes anyone who:
earned income that exceeded $200,000 (or $300,000 together with a spouse) in each of the prior two years, and reasonably expects the same for the current year, OR
has a net worth over $1 million, either alone or together with a spouse (excluding the value of the person’s primary residence).
On the income test, the person must satisfy the thresholds for the three years consistently either alone or with a spouse, and cannot, for example, satisfy one year based on individual income and the next two years based on joint income with a spouse. The only exception is if a person is married within this period, in which case the person may satisfy the threshold on the basis of joint income for the years during which the person was married and on the basis of individual income for the other years.
In addition, entities such as banks, partnerships, corporations, nonprofits and trusts may be accredited investors. Of the entities that would be considered accredited investors and depending on your circumstances, the following may be relevant to you:
any trust, with total assets in excess of $5 million, not formed to specifically purchase the subject securities, whose purchase is directed by a sophisticated person, or
any entity in which all of the equity owners are accredited investors.
In this context, a sophisticated person means the person must have, or the company or private fund offering the securities reasonably believes that this person has, sufficient knowledge and experience in financial and business matters to evaluate the merits and risks of the prospective investment."
So basically you have to be what would be considered wealthy to buy it. The average joe just cant pick up some of this ICO without becoming an accredited investor. This part sort of makes me chuckle because you hear all about income inequality etc these days but the SEC wants to prevent you from being able to buy something simply because you arent rich. They give the rich special opportunities that the average person cant have. Way to really care about income inequality! lol
I always find it odd that some are in favor of this type of ruling but then in the same breath complain about income inequality and the rich getting richer. Good work screwing over the little guy under the guise of protecting them! doesnt matter how smart you are or how wise you are at investing or the fact that you may have made a bunch of profit off of crypto and have nothing to lose by investing. You will be discriminated against and have opportunities taken away simply because you aren't rich. Nice work!
Once you start to pay attention to laws and regulations, you start to understand that they are mostly to keep the rich, rich
The Accredited Investor Standard fails to fulfill its purpose. It’s supposed to protect those who don’t understand financial and business matters. Yet, the Accredited Investor Standard current metrics (income level and net worth) don’t measure understanding of financial or business matters. There are a lot of people who have made millions and ended up broke (google broke athletes, celebrities, or Bernie Madoff).
There is a bigger implication to this standard, than just helping the rich get richer, OUR PERSONAL FREEDOM! The government is trying to protect us from ourselves. I find it ironic that real life changing financial opportunities are denied the average citizen and, yet the federal government allows states to rakie in billions on lottery sales! Just some food for thought.
Thoughtful comment and one I much agree with!
Yup it is pure madness and goes to show you how the entire system is built to keep you restricted. We need to start breaking these chains while there is still some wiggle room left before it is all gone
This is absolutely insane! Can anyone explain the reason for this, finding it hard to believe they just said "screw anyone who isn't rich"?
It's part of registering your product as a security in the US. If you look at other coins, they go out of their way to point out that they are not securities partly for this reason. For example, If you look at all of the disclaimers on the EOS distribution. The SEC supposedly does this to protect unsophisticated investors from themselves. It's a blunt instrument and does have the effect of only allowing rich people to get in on IPO's. It uses the assumption that any security can go to zero, so it keeps regular people from betting it all(or a likely unrecoverable portion) on a single security. Once a security is vetted to the point of making it on a regulated exchange(eg. NYSE, NASDAQ), it's fair game for anyone.
Kind of the opposite of Finland :P
Well yea, but then again Finland is a little too much Robin Hood for my taste. Stealing from the rich is still stealing.
To my knowledge, Forex trading used to be very lucrative for the average trader... Now it's become trash due to regulations :-r
Nice article, enjoyed reading your post, looking forward to more of your post, thanks for sharing keep up the good work.
I don't know much about the rules of the SEC but according to the regulations of NWA, F*ck the Police.
From the mouth of babes!
The * makes it okay.
Consider that 90% of ICOs are cash grabs that have no chance of getting a return. Buying into an ICO is no better than an unregulated casino. These are limited to the rich. not because they want all of the profits for themselves, but because they won't be ruined by the likely outcome of the ICO being a scam and the coin being worthless.
We were discussing this in our crypto group and think any company that is only allowing the wealthy to buy into their ICO should be avoided and us little people should make sure it fails.
Very nice and informative post. I appreciate your post