Coinbase CEO Backs SEC Proposal to Expand Retail Access to Private Markets

TLDR:

• Brian Armstrong backed the SEC’s proposal on October 11 to broaden retail access to private markets.
• The SEC is considering professional credentials and FINRA exams as alternative routes to accredited investor status.
• Current eligibility generally requires $200,000 in annual income or $1 million in net worth, excluding a primary residence.
• The proposal covers regulated funds, adviser compensation disclosures and interval fund rules, but changes are not final.

Coinbase CEO Brian Armstrong has backed a U.S. Securities and Exchange Commission (SEC) proposal to broaden retail investors’ access to private markets. His support comes as regulators consider alternative ways for ordinary Americans to qualify for investments traditionally reserved for wealthier individuals.

In an October 11 post on X, Armstrong argued that everyday investors have missed opportunities as companies increasingly remain private for longer. This trend can leave early shareholders with years of access to private-company growth before ordinary investors can participate through public markets.

Armstrong also warned that late entrants could become exit liquidity for earlier shareholders. This occurs when investors buy into an opportunity while existing holders sell their positions, potentially leaving newcomers exposed to unfavorable valuations.

SEC Weighs Professional Credentials and Exams for Accredited Investor Status

The proposal follows the regulator’s September 30 announcement of potential changes affecting private-market investments and regulated funds. These measures aim to broaden participation while retaining investor protections.

Among the proposed changes, registered investment advisers could receive performance-based compensation from additional client categories, including certain regulated funds. The regulator also plans to require further disclosures about this compensation and modernize rules governing interval funds. Separately, the agency is seeking public feedback on alternative ways to qualify as an accredited investor.

Options under consideration include professional credentials, examinations and certain financial industry licenses. The qualifications being considered include the Chartered Financial Analyst (CFA) charter, Certified Public Accountant (CPA) license and Certified Financial Planner (CFP) certification. Certain Financial Industry Regulatory Authority licenses and an accredited investor examination developed by FINRA are also under consideration.

These alternatives could give individuals another way to demonstrate financial knowledge without meeting existing income or wealth requirements. However, the proposals remain under consideration and have not become established rules.

Under current requirements, individuals generally qualify through annual income exceeding $200,000 for each of the previous two years. Alternatively, joint income exceeding $300,000 or net worth above $1 million, excluding a primary residence, can establish eligibility.

Longer Private Company Lifecycles Raise Concerns About Late-Stage Access

The debate reflects a changing fundraising environment in which businesses can secure successive private funding rounds without listing shares publicly. Consequently, founders and early shareholders can retain control while delaying public disclosure requirements and listing costs.

For retail investors, this can mean waiting until an initial public offering (IPO) to access publicly traded shares. By then, early investors may have participated in private funding rounds and transactions unavailable to the wider market.

Armstrong’s warning about exit liquidity centers on this timing gap. Investors entering later could face elevated valuations while earlier shareholders sell, although outcomes depend on individual companies, investment terms and pricing.

Broader access through regulated funds would not eliminate investment risks. Private-market assets can involve limited liquidity, uncertain valuations, fees and potential losses. Interval funds also 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. Until then, the proposal signals a possible change in access to private markets, not an immediate opening of every private investment to retail investors.

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