US Securities and Exchange Commission Chair Paul Atkins signaled that the regulatory agency will work with US President Donald Trump’s administration to allow retail investors equal opportunities to invest in private equity.
Atkins cited the recent Trump executive order to allow crypto and alternative assets in 401K retirement accounts — tax-sheltered retirement plans funded by individuals and their employers — as the catalyst for the effort. He told Fox Business on Saturday:
“It’s not really great to have a situation where large endowments and pension funds like state pension funds can be diversified in the public and private markets, while the 401ks cannot. I think that’s one of the goals of this executive order: to direct the Department of Labor and the SEC to work together to help make that a reality.”
However, Atkins urged caution and putting the “proper guardrails” around alternative investments. “We can’t just fling the gates open and have investors rush in where one has to be careful,” he said.
The agency has prioritized regulating cryptocurrencies to make the US the global leader in digital assets, Atkins recently said.
Broadening access to private equity will allow retail investors to invest in early-stage crypto projects and private token sales typically reserved for accredited or institutional investors.
Cointelegraph reached out to the SEC for details on a potential overhaul of accredited investor rules, but the agency declined to comment.
Related: SEC to focus on ‘clear’ crypto regulations after Ripple case: Atkins
Crypto investors welcome the change, but risks loom
The SEC overhauled accredited investor regulations in 2020 to emphasize financial knowledge and skill over net worth, broadening who could qualify as an accredited investor in the US.
Despite this, the current regulations are prohibitive and lock out retail investors from some of investment products, according to Christopher Perkins, president of investment fund CoinFund.
Accreditation rules exist as a form of consumer protection to shield investors from taking on too much financial risk, according to the SEC.
These risks are compounded in private businesses that do not have to follow the same disclosure requirements and may need more financial acumen to fully understand over their public counterparts.
Private investments are also illiquid, and a contagion could spread through the financial system through overleveraging or malinvestment that spills over into other asset classes and markets during a financial crisis.
Magazine: SEC’s U-turn on crypto leaves key questions unanswered
