The Lowdown
Revising Accredited Investor Rules for Maximizing Tokenization Advantages: Suggestions from Robinhood Crypto GM
Robinhood's bigwig, Johann Kerbrat, wants to shake up investor rules for a tokenized future. As it stands, most U.S. citizens can't invest in early-stage tokenized companies due to existing accreditation requirements.
In an interview with Decrypt, Kerbrat, the Crypto Senior Vice President and General Manager at Robinhood, suggests that blockchains could offer a transparent way for startup founders to raise funds without losing control – a dream hindered by the current U.S. rules that limit 90% of the population due to income restrictions.
Normally, venture capitalists and investment banks help startups raise funds before going public. However, these intermediaries pose several problems. For instance, share dilution can occur, resulting in loss of control, and fees pile up—from intermediaries and even exchanges.
Kerbrat believes tokenization can change the game by enabling startup founders to bypass middlemen, leveraging platforms like Robinhood. He advocates that accreditation shouldn't rely solely on income, but rather on investor education.
In April, Kerbrat sent a letter to the Securities and Exchange Commission (SEC) recommending knowledge-based tests and self-certification components to investor accreditation.
If implemented, this change could democratize the market by allowing more investors to participate in tokenized offerings, fueling innovation and growth in the startup ecosystem.
However, as of now, the SEC has not officially responded to Kerbrat's suggestion. Robinhood continues to engage with regulatory bodies, as evident in their 42-page proposal regarding Real-World Assets (RWA) tokens. This proposal suggests altering regulations to accommodate tokenized securities, but again, no updates have been announced by the SEC.
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- Johann Kerbrat, the Crypto Senior Vice President and General Manager at Robinhood, aims to improve investor rules for a decentralized future, suggesting that blockchains could offer a transparent method for startup founders to raise funds without losing control.
- In his interview with Decrypt, Kerbrat proposed that instead of relying solely on income, accreditation should focus on investor education, enabling more people to participate in early-stage tokenized companies.
- Traditionally, venture capitalists and investment banks help startups raise funds, but Kerbrat believes that tokenization can change the game by allowing startup founders to bypass intermediaries, leveraging decentralized platforms like Robinhood.
- In April, Kerbrat sent a letter to the Securities and Exchange Commission (SEC) recommending knowledge-based tests and self-certification components to investor accreditation, with the aim of democratizing the market and fueling innovation.
- If the SEC were to implement Kerbrat's recommendations, it could open up investment opportunities in tokenized offerings on crypto exchanges like Ethereum (eth), Bitcoin (btc), and others, enabling more diverse investors to participate in the startup ecosystem.
- Robinhood continues to engage with regulatory bodies like the SEC, as shown by their 42-page proposal regarding Real-World Assets (RWA) tokens, which suggests altering regulations to accommodate tokenized securities. However, no updates have been announced by the SEC regarding these proposals.
