The Securities and Exchange Commission’s (SEC’s) new Chair, Paul Atkins, today discussed the SEC’s approach to innovation under the new administration. Apart from discussing crypto, he also proposed relaxing rules for retail investors in closed end funds that invest in private assets, such as hedge funds and private equity. Currently they have a $25,000 minimum investment to filter out most retail investors. Is this good or bad for tokenization?
With more companies and “unicorns” staying private for longer, these investment opportunities are often only available to accredited investors. Though riskier, these opportunities offer upside that retail investors cannot currently access.
In February Commissioner Uyeda raised a similar topic suggesting that if an investor has a diversified portfolio it would help address the risks, and he repeated this in a speech last week. According to SEC statistics, the aggregate value of private funds grew from $9.5 trillion in 2012 to $30.9 trillion in 2024.
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