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An accredited investor is a made-up definition from the Securities Act of 1933.
I say it’s made up because all financial definitions are made up, and rarely for your benefit.
This one keeps poor people poor and makes rich people richer. Whether that was the deliberate plan in 1933, or an unintended consequence, is anyone’s guess.
No one has to guess, though, about this regulation’s effect on the average U.S. citizen’s options for crypto investments.
Its declared purpose was to save the little guy from himself. Since he lacked the knowledge and wisdom to invest his money safely, the government had to protect him.
Think I’m being a little hyperbolic? Here’s what the U.S. government says it means to be an accredited investor. It’s from this April 2021 investor.gov bulletin:
So it’s okay for the unsophisticated to buy stocks. But it’s not okay for them to buy any investment that’s not registered with the Securities and Exchange Commission (SEC).
In its infinite wisdom, the SEC has decided that cryptocurrencies are unregistered securities. So you must be an accredited investor to do anything with cryptos on that list.
According to this page of the Code of Federal Regulations, an accredited investor can be a legal entity or a natural person. (A natural person is a human.)
For you (a natural person) to be considered an accredited investor, you must:
Or you can hold one of three designations or credentials as a financial professional.
Because of all the rules and regulations regarding unregistered securities, many exchanges have created U.S. versions.
These only offer crypto coins and tokens that don’t require accredited investor status for U.S. citizens and residents. And they don’t offer any way to earn income on assets left on the exchange.
So if you’re a U.S. citizen or permanent resident, you’ll have to trade on an exchange that’s just for you. That way you’ll always be buying, selling and trading coins or tokens that your government says are okay for you to own.
As an accredited investor on those exchanges, you’ll have a bit more leeway, but you’ll still be restricted to only the coins and tokens they make available to you.