The Securities and Exchanges Commission (SEC) has proudly announced that after years of work they are modernizing the century old discriminatory law on investments.
“Today’s amendments are the product of years of effort by the Commission and its staff to consider and analyze approaches to revising the accredited investor definition,” said Capo Jay Clayton, adding:
“For the first time, individuals will be permitted to participate in our private capital markets not only based on their income or net worth, but also based on established, clear measures of financial sophistication.”
These years of work have led to the genius idea of asking people to sit a test, at the end of which they get a certificate from an accredited institution. They say:
“The amendments to the accredited investor definition in Rule 501(a) adds a new category to the definition that permits natural persons to qualify as accredited investors based on certain professional certifications, designations or credentials or other credentials issued by an accredited educational institution, which the Commission may designate from time to time by order.”
This thing was proposed in December. At the time, one of SEC’s own commissioners said they still wouldn’t qualify even after what then was a proposed amendment.
It’s not clear what test this is exactly, or whether it needs a PhD course for one to pass it, nor is it clear how much it would cost or how long the process would take.
Yet this is SEC’s solution to the prohibition of anyone that earns less than $200,000 a year (so basically everyone) from investing in the next Google.
Europe on the other hand seems to be taking a far more sophisticated approach with a wholistic framework proposed by the European Commission itself.
While SEC said no sandbox, Europe will have a nice sandbox soon. Far more importantly, it will have a crypto single market.
The European single market has a GDP of $18 trillion, far more than China and close to the same as the United States.
They’re talking of e-stocks, with Europe in desperate need of a continental exchange due to SEC’s ADR protectionism.
So these e-stocks and the crypto single market and the blockchain being a new thing, and thus needing a new framework, can be a way to modernize the whole of European finance.
You’d think that would put some pressure on SEC, but as we saw with New York’s Bitlicense v London”s Fintech in 2014, it does not sound like America’s bureaucracy cares very much about being competitive.
Hence we get this ‘years of work’ to come up with a test because they say everything works fine in their regulatory system, despite these investment prohibitions being a root cause of the now biblical wealth inequality.
It’s an election year however, and both Biden and Trump are sweating. Polls are saying all sorts of things as we all know, but we all also know polls know nothing.
The American public is most likely very undecided and many won’t decide until the very day itself.
So what happens here, which affects the economy totally from biotech innovation to moon exploration, can have significant bearing on what the public concludes with these investment prohibitions being the real frontier of civil rights.