Coinbase CEO Brian Armstrong has endorsed a U.S. Securities and Exchange Commission proposal aimed at expanding retail investor access to private markets. In an October 11 post on X, Armstrong argued that everyday investors have missed opportunities as companies remain private longer before going public, leaving ordinary investors unable to participate in early growth stages.
Armstrong warned that late entrants to private investments could become exit liquidity for earlier shareholders, potentially facing unfavorable valuations as initial investors sell their positions.
SEC Considers Alternative Qualification Routes
The proposal follows the SEC's September 30 announcement of potential changes to private-market investment rules and regulated funds. The regulator is seeking public feedback on alternative ways to qualify as an accredited investor beyond existing income and wealth requirements.
Options under consideration include professional credentials such as the Chartered Financial Analyst charter, Certified Public Accountant license, and Certified Financial Planner certification. The Securities and Exchange Commission is also evaluating certain Financial Industry Regulatory Authority licenses and a FINRA-developed accredited investor examination.
Currently, individuals qualify as accredited investors through annual income exceeding $200,000 for each of the previous two years, joint income exceeding $300,000, or net worth above $1 million, excluding a primary residence.
Broader Regulatory Changes Proposed
The SEC proposal also covers additional provisions beyond accredited investor qualification. Registered investment advisers could receive performance-based compensation from certain regulated funds, with the regulator requiring further disclosures about such compensation. The SEC also plans to modernize rules governing interval funds.
Private-market investments remain subject to risks including limited liquidity, uncertain valuations, fees, and potential losses. Interval funds typically offer repurchases at scheduled intervals rather than unrestricted daily withdrawals. The regulatory process will determine which proposed changes proceed and what safeguards accompany them.
