The Accredited Investor Bullshit

The system is rigged. Unfortunately, this is not news and don’t get too hopeful; it will not change for the better.

Just in case you are not familiar with the term, an accredited investor is a person with either high annual income or high net worth. In the traditional markets early entry into promising projects is limited to accredited investors as they are presumed to be more sophisticated and also better equipped to survive loses.

There is a lot of talk about the SEC considering all ICOs stock offerings. This gives them power to regulate all ICOs and possibly even to go back in time and punish cryptocurrencies which are well past the ICO stage.

Another topic bantered about in legacy financial circles is making ICO investments not just SEC compliant and regulated but also limited only to accredited investors.

It is well known and proven that the early investors are the ones that profit the most. Venture capitalists invest in a multitude of startups in early stages. If even one out of ten investments is successful, the company is made “public”. In other words, it is sold on the stock exchange and everyone can buy the shares. That is when the venture capital investors cash out and the “regular Joe” buys in. The regular Joe pays hundreds of times more for a share than the venture investors did. Of course, venture capital investors are accredited.

The ICO concept bypassed the need for venture capital funding by going straight to the public. A lot of people, some very young and naïve, invested or speculated in pre ICOs and made a lot of money.

But the big, legacy players and Wall Street don’t like that. The wrong people are getting rich and they can’t extract a toll in the process. So, they are pushing to change the ICO model into the standard fundraising controlled by Wall Street. The bullshit they try to sell is that too many ICOs are scams and innocent people are losing money.

Accredited investors have the early adopter opportunity. Early adoption is where most money is made. Think buying Bitcoin below $30. By limiting the opportunities for regular folks to get in pre ICOs they are cutting the options available to the public.

Yes, some will get hurt, but some will do very well. Letting only those with money in, on money making opportunities, is a bigger crime than letting people suffer from their own mistakes.