The Chairman of the U.S. Securities and Exchange Commission (SEC), Paul Atkins, stated that the regulatory agency will work with the administration of U.S. President Donald Trump to provide retail investors with equal opportunities to invest in private equity.
Atkins cited a recent executive order signed by Trump that allows cryptocurrencies and alternative assets to enter 401K retirement accounts—tax-advantaged retirement plans funded jointly by individuals and employers—as a catalyst for this effort. He said in an interview with Fox Business on Saturday:
However, Atkins urged caution and the establishment of "appropriate guardrails" around alternative investments. He stated, "We cannot just throw open the floodgates and let investors rush into areas that require caution."
Atkins recently indicated that the agency has prioritized regulating cryptocurrencies to make the U.S. a global leader in digital assets.
Expanding access to private equity investment channels will allow retail investors to invest in early-stage crypto projects and private token sales that are typically limited to accredited or institutional investors.
Cointelegraph reached out to the SEC regarding potential comprehensive reforms to the accredited investor rules, but the agency declined to comment.
The SEC revised the accredited investor regulations in 2020, emphasizing financial knowledge and skills rather than net worth, thereby broadening the pool of individuals eligible for accredited investor status in the U.S.
Nevertheless, according to Christopher Perkins, president of investment fund CoinFund, the current regulations remain restrictive, excluding retail investors from certain investment products.
According to the SEC, the accreditation rules exist as a form of consumer protection, designed to shield investors from excessive financial risk.
These risks are more complex in private companies, as they are not required to follow the same disclosure requirements as public companies, which may necessitate more financial knowledge to fully understand.
Private investments also lack liquidity, and during financial crises, contagion can spread to the financial system through excessive leverage or misinvestments, affecting other asset classes and markets.
Related: Cryptocurrency and fintech executives call on the Trump administration to ban banks from charging customer data fees
Original article: “SEC Chairman Paul Atkins Hints Retail Investors Will Gain Access to Private Equity Investment”
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