According to CoinDesk, U.S. President Donald Trump has recently introduced initiatives aimed at attracting foreign investment, including a proposed Gold Card that would grant legal status to foreign investors for $5 million. Additionally, he highlighted a significant $200 billion investment from Japan's SoftBank during his Joint Address to Congress. While these efforts to draw offshore investment are noteworthy, there is a growing concern about untapped investment potential within the United States.
The accredited investor rule, which mandates individuals to have a net worth exceeding $1 million or an annual income above $200,000, is seen as a barrier preventing many Americans from accessing lucrative securities markets. This regulation effectively excludes 80% of American households from participating in private markets, which are increasingly favored by companies like Stripe and SpaceX over public markets due to less stringent regulatory requirements. As more businesses opt to remain private, everyday Americans are missing out on opportunities to build wealth alongside these companies.
Historically, public markets were the primary source of capital for large, high-growth companies, offering the public access to top investments. However, the appeal of becoming a public company has diminished, as noted by SEC Commissioner Hester Peirce. Private markets have been expanding at twice the rate of global public equity markets, largely due to the constraints imposed by the accredited investor rule.
The rule, outlined in 17 CFR § 230.501(a), restricts access to private investments, requiring investors to meet specific criteria to participate in offerings like Regulation D. Critics argue that this regulation prevents millions of Americans from investing in promising companies shaping the future, such as OpenAI and Anthropic. Advocates of the rule maintain that financial resources, rather than knowledge, are necessary to protect investors from potential losses.
Efforts to amend the accredited investor rule have been proposed, including the Empowering Main Street in America Act (EMSAA) sponsored by Sen. Tim Scott, which suggests a test-in policy for accredited investors. This approach would allow any American who passes the test to invest, broadening access to private markets and enabling more citizens to share in the nation's economic success. The SEC has the authority to implement such changes without new legislation, potentially reshaping private markets through rulemaking alone. Advocates urge the SEC to take action to amend the rule and enhance investment opportunities for all Americans.
Alex
Miyuki
Weiliang