Oct. 14, 2023
The SEC's proposed expansion of the accredited investor definition, while well-intentioned, could inadvertently harm decentralized digital asset networks by restricting participation. Many open, permissionless blockchain protocols like Bitcoin and Ethereum rely on broad user bases to drive development and decentralization. Limiting smaller investors' access through accredited standards counters this ethos. The complex technical nature of some digital assets already poses barriers to mass adoption. Additional SEC-imposed qualifications would further concentrate ownership among wealthy few, defeating principles of open access. Minimum income and net worth requirements also disadvantage younger generations eager to responsibly participate in digital asset networks. Excluding these tech-savvy individuals stunts innovation. Prescribed investor qualifications seem antiquated and paternalistic for decentralized public blockchains, which promote financial inclusion and self-sovereignty. Users independently evaluate risks based on merit rather than SEC-conferred status. Rather than expanded accredited investor criteria, the SEC should foster education to empower Americans to make informed decisions about accessing permissionless, decentralized networks. Blanket accredited investor requirements - while protecting some from excessive risk - can counterproductively reduce participation, decentralization, and innovation within the digital asset space. More nuanced policy is needed. I urge reconsidering provisions that may inadvertently concentrate decentralized ownership. Wiser regulation empowers everyday Americans to benefit from technological innovation. Kraig Hotelling