Some in the tech industry want rules changed so that young people can invest more. 

Currently, Australian law imposes a threshold that requires investors be deemed “sophisticated or wholesale” investors in order to invest in early stage, unlisted companies, such as those servicing the cryptocurrency market.

“Sophisticated” investors must be certified by an accountant, as well as having at least $2.5 million in assets (including a principle-residence property) or earn at least $250,000 a year in two consecutive years. The same thresholds are imposed for investors to be considered a “wholesale investor” to purchase units in certain managed funds.

Regular, ‘retail’ investors can purchase cryptocurrencies via an unregulated exchange, but the regulated managed funds invested in crypto assets in Australia are currently “wholesale only”.

“The sophisticated investor rules are really inappropriate,” Chloe White, principal of crypto policy consultancy Genesis Block and a former adviser to the Commonwealth Treasury, said at a finance summit this week. 

She said there is a growing number of well-informed young people who have the technical knowledge required to invest in early stage crypto ventures, “whereas my grandpa who, bless his heart, barely speaks English and never went to high school qualifies as a sophisticated investor because he owns his house”.

As well as being blocked out, there is concern that as crypto assets become more integrated more in the traditional financial system, the sophisticated investor test may end up being applied to crypto-linked investments that are currently outside the regime.

Many argue that the rules about certification of sophisticated investors should be toughened to protect consumers from high-risk investments.