The Securities and Exchange Commission (SEC) has released a proposal for public comment that would allow individuals without a $1 million net worth or a $200,000 annual salary to gain accredited investor status by passing a $100 examination. Driven by SEC Chair Paul Atkins, the initiative seeks to broaden retail participation in private companies and venture funds as institutional capital commitments decline.
Exam Design and Industry Reactions
Under the SEC notice, the Financial Industry Regulatory Authority (FINRA) would create and administer the 75-question, multiple-choice test. Candidates aged 18 or older would have two hours to complete the exam in person, with a passing score remaining valid for 10 years. Investment risks will account for 20% to 28% of the score, alongside questions on corporate governance, financial statements, and conflicts of interest. The SEC is also evaluating whether Certified Public Accountants (CPAs), Chartered Financial Analyst (CFA) charter-holders, and Certified Financial Planner (CFP) professionals should automatically qualify.
Key figures across finance and crypto have voiced contrasting opinions on the rule change. Coinbase CEO Brian Armstrong praised the move, calling it "a huge step forward" and noting that "for too long, only the richest people have had access to the private markets. Retail has been missing out." Crypto firms are already actively expanding into private equity services, highlighted by crypto payments processor MoonPay agreeing in September to buy Utah-based private deal broker North Capital.
However, SEC Commissioner Hester Peirce expressed reservations about government testing, stating, "I'm not a fan of accredited investor gating, but at least we're proposing to nudge the gate open a bit." Conversely, Noah Damsky, a principal at Marina Wealth Advisors, labeled the exam concept "horrible," warning that private-market products are poorly suited for typical retail investors. The proposal follows broader capital market updates, much like recent debate around the SEC exemption for tokenized stocks.
Institutional Pullback and Key Takeaways
The timing of the SEC push coincides with a prolonged contraction in institutional private funding. Data from PitchBook shows that total capital raised by private funds is on track to fall for a fifth consecutive year due to reduced exit activity and lower cash distributions. Benjamin Schiffrin, securities policy director at financial reform group Better Markets, argued that private funds are targeting retail savings "as institutional investors increasingly pull back from private markets."
- Exam Fee and Structure: Costs $100, consists of 75 questions over two hours, and is valid for 10 years.
- Eligibility Expansion: Bypasses traditional limits of $1 million in net worth or $200,000 salary.
- Public Timeline: The SEC public comment window closes on December 4.
Why It Matters
Opening private asset markets to non-accredited individuals marks a structural shift in how early-stage ventures and private funds source capital. While this grants everyday investors access to high-upside opportunities previously reserved for high-net-worth individuals, it also shifts illiquid, high-risk exposure onto retail balance sheets. If finalized, crypto and fintech platforms bridging private shares with digital infrastructure stand to capture significant new transaction volume.
