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Becoming an ‘accredited investor’ in the US is no longer just about being rich

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The Securities and Exchange Commission, or SEC, is now amending its definition of an “accredited investor” to relax the purely wealth-based requirements, after announcing such plans in December 2019.

Accredited investors in the U.S. enjoy special privileges with the SEC — namely being able to participate in certain types of simplified securities sales like Regulation D.

The SEC noted that previous definitions relied on specific income and net worth criteria, which did not take their actual “financial sophistication” into account. In the case of the U.S., these requirements amounted to either $1 million in net worth or a stable income of at least $200,000 per year.

The criteria is now expanded as the “product of years of effort by the Commission and its staff to consider and analyze approaches to revising the accredited investor definition,” SEC chairman Jay Clayton said.

The details are as of yet not fully clear, but the new definition will allow people to qualify as accredited investors based on “professional certifications, designations or credentials, or other credentials issued by an accredited educational institution.”

These educational institutions are to be designated at some future time at the SEC’s discretion. It is unclear what types of institutions could become accredited for these purposes, and whether it would require specialized training courses or general economics and finance education.

Other minor expansions of the criteria include “knowledgeable employees” of private investment funds and family offices with more than $5 million in assets under management.

The decision could be consequential for crypto-based fundraising, as it would expand the list of potential investors in security token offerings. However, it remains to be seen if the new measures will be generalized enough to expand the pool of accredited investors by a significant amount.



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Regulation

El Salvadorians take to the streets to protest Bitcoin law

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Protesters calling themselves the Popular Resistance and Rebellion Block have come out against El Salvador’s government passing a law making Bitcoin legal tender.

A Tuesday tweet from local news outlet El Mundo shows El Salvadorians carrying banners saying “no to Bitcoin” in the streets of San Salvador demanding a repeal of the country’s Bitcoin law. Legislative assembly members Anabel Belloso and Dina Argueta addressed the protesters after first meeting the group separated by a barrier of razor wire.

In a letter made available at the protest, the Popular Resistance and Rebellion Block group claimed that President Nayib Bukele passed the law making the cryptocurrency legal tender in the country without proper consultations with the people. It also cited the volatility of Bitcoin (BTC), comparing investing in the cryptocurrency to playing the lottery: “betting on the lottery is a voluntary act, while Bitcoin is required by law.”

Related: Coercion and coexistence: How El Salvador’s Bitcoin Law may change global finance

However, the group’s main grievance around the Bitcoin legal framework seemed to be centered around a perceived disparity in the cryptocurrency’s usage by the government when compared with the average resident in El Salvador. Protesters said Bitcoin “only serves some large businessmen, especially those linked to the government, to launder ill-gotten money.”

“Entrepreneurs who put their capital in Bitcoin will not pay taxes on their earnings,” said the letter. “In addition, to apply Bitcoin the government will spend millions of dollars of the taxes paid by the people.”

They added:

“Bitcoin would facilitate public corruption and the operations of drug, arms and human traffickers, extortionists and tax evaders. It would also cause monetary chaos. It would hit people’s salaries, pensions and savings, ruin many MSMEs, affect low-income families and hit the middle class.”

Though passed by El Salvador’s government and signed into law by Bukele in June, the law recognizing Bitcoin as legal currency in the country will not go into effect until Sept. 7. The Popular Resistance and Rebellion Block’s protest was aimed at government officials to demand the law be repealed. In addition, the World Bank has also refused to help El Salvador transition to a Bitcoin-friendly framework, given its “environmental and transparency shortcomings.”

Related: What is really behind El Salvador’s ‘Bitcoin Law’? Experts answer

During a scheduled visit by the U.S. State Department earlier this month, Under Secretary of State for Political Affairs Victoria Nuland suggested El Salvador ensure Bitcoin is well regulated and transparent, but did not explicitly say anything against the country’s move to a more digital economy. Some proponents of the law including Bukele have suggested Bitcoin could help facilitate remittance payments from El Salvador citizens living abroad and lessen the country’s reliance on the U.S. dollar.