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> The simplest thing would be to extend the "accredited investor" standard, such that anybody who wants to play the digital ponies either needs to be rich enoug
by SkyMarshal 4y ago
> The simplest thing would be to extend the "accredited investor" standard, such that anybody who wants to play the digital ponies either needs to be rich enough to afford the losses or prove sufficient sophistication that they really know what they're doing.
I think this is already more or less the case. The SEC recently updated the accredited investor standard to include not just means testing, but alternate sophistication tests like Series 7/63/etc, CFA iirc. I’m not sure how/if they fully enforce it or not, but they do to at least some extent, which is why FTX, Binance and others run two versions of their services, a US-based one and an international one.
- tptacek 4y agoFTX had billboards up all over Chicago. A hedge fund can't do that; the regulations on qualified investments (at least pre-JOBS) prohibit promotion to retail investors.
- chadash 4y agoThere’s another reason. Hedge funds don’t want your $2,000-20,000.
- dan-robertson 4y agoIt might depend a little on the fund but I think it’s probably right that conditional on a client investing a small amount of money, they are more likely a big pain to deal with. On the other hand I think startups often accept pretty tiny (eg 5-10k) angel investments. But maybe I’m wrong about that.
- chadash 4y agoI think a typical hedge fund won't accept less than $100k. For a lot of brand-name funds, the minimum is $1M or higher. Many of them won't accept new investors at all, or when they do, it's for very large amounts of money. For example, Citadel is $10m+. Millenium is $25m+.
- SkyMarshal 4y agoYeah all that advertising was gross. Definitely needs to be shut down.