So far this year, the US House of Representatives has approved two bills that aim to update the definition of an Accredited Investor.
An Accredited Investor is broadly defined as someone who earns over $200,000 per year ($300,000 if married) or has a net worth of over $1 million, excluding the value of their primary residence. The definition primarily applies to securities issued under Regulation D, the most widely used exemption for private securities offerings.
The goal of the rule, which has been in place since the 1980s, is to “protect” smaller investors from taking on too much risk and perhaps losing their money.
Obviously, the rule is profoundly flawed as it creates a wealth hurdle for participation in certain private securities offerings while ignoring the fact that the rule should be knowledge-based, driven by education or experience. Unfortunately, too many policymakers have struggled with this concept.
The net effect of the Accredited Investor rule is that it has disenfranchised millions from having the option to participate in these private securities offerings. Meanwhile, private markets have boomed, with affluent investors moving quickly to invest in promising private firms, often leaving smaller investors behind.
The first bill, the Fair Investment Opportunities for Professional Experts Act (HR 3394), was approved in June. This bill will expand the definition to include individuals with certain licenses, education, or applicable experience. The net worth hurdle will be adjusted every five years to reflect inflation. The income metric remains essentially unchanged.
The second bill, the Equal Opportunity for All Investors Act of 2025 (HR 3339), will establish an exam to determine whether an individual qualifies as Accredited.
Both bills garnered bipartisan support and are now headed to the Senate to sort things out. In the end, it is pretty certain something will make it through the Senate and the decades of discrimination will end once the bill is signed into law.
Recently, the Association of Online Investment Platforms (AOIP) submitted a letter in support of changes to the definition of an Accredited Investor. Most online capital formation platforms enable issuers to raise money under the various securities exemptions, including Reg CF, Reg A, and Reg D. A change to the definition could open up a new world of investment opportunities for the population while enabling more firms to raise money online via these platforms. A win for all sides.
AOIP commented on the Accredited Investor legislation:
“These thoughtful and impactful bills modernize the definition of an “accredited investor,” replacing outdated wealth and income thresholds with a more inclusive, competency-based framework. By recognizing qualifications such as professional licenses, relevant education, industry experience, and allowing for certification via scaled examinations, these bills empower more Americans, regardless of zip code or wealth bracket, to participate in the private capital markets.
As stakeholders in the U.S. investment crowdfunding ecosystem, we particularly commend the Committee for acknowledging that access to capital and investment opportunity must evolve in tandem.”
Congress, under Republican control, has moved quickly to support innovation, access to capital, and smaller investors. This is in contrast to the previous administration which was hostile towards capital formation while striving to make it more difficult for investors to back private firms. While things could be changed once the legislation makes it through the Senate, the recent victories like the GENIUS Act, indicate that policy is heading back in the direction of supporting entrepreneurship and seeking to make opportunity available to all.
