Coinbase CEO Brian Armstrong argues accredited-investor rules keep retail investors out of private markets

Coinbase co-founder and CEO Brian Armstrong is pushing a reform of U.S. rules that determine who is allowed to invest in private companies, arguing that the current system effectively privileges wealthy investors and blocks most retail participants from those opportunities.

Armstrong’s proposal centers on replacing the “accredited investor” standard, which generally ties eligibility to wealth or income, with a financial literacy test. He has described the existing approach as “outdated” and a “regressive tax” because it restricts access to private-market deals to those who already have money, rather than those who are willing and able to learn how the risks work. The idea was discussed on Yahoo Finance’s Power Players podcast, according to reporting summarized by another outlet.

In laying out what a literacy test could look like, Armstrong pointed to core personal-finance and investing concepts that he said should be learnable and assessable. Among the topics he referenced were dollar-cost averaging, how to read financial statements and disclosures, position sizing, and what investors should do during market downturns. He also suggested that a broadly shared set of “best practices” and beliefs could form the basis of such an exam even if investing philosophies differ across individuals.

Armstrong’s argument is that private-company investing should not be limited to those who meet a narrow wealth threshold, but could be opened up if regulators and market participants agree on a common understanding of risk and basic financial literacy. In the discussion, he used a hypothetical $100 investment in defense technology firm Anduril’s Series C round as an example of what the change might unlock for smaller investors if eligibility were based on knowledge rather than net worth.

The CEO acknowledged that building and validating the test would not be straightforward, given the range of legitimate investing approaches. Still, he said agreement on a shared curriculum could be achievable, with the goal of enabling “anybody” to participate in private markets if they can demonstrate they understand the material concepts.

For Coinbase, the issue is not just philosophical. The company operates a crypto trading and custody ecosystem that relies on retail onboarding and ongoing regulatory compliance, and Armstrong has in the past used policy discussions to argue that access should be expanded without lowering standards. In that context, the push to alter how investors qualify for private placements aligns with a broader theme: reform eligibility rules so that participation depends on demonstrated competence, not status.

Regulators have historically justified the accredited-investor framework as a way to protect less-sophisticated investors from complex or illiquid investments. Armstrong’s proposal would shift the burden from meeting a financial threshold to demonstrating knowledge, but it does not specify who would administer the test, how pass/fail would be enforced, or how outcomes would be audited.

Armstrong’s comments also do not address several practical questions markets would likely raise, including what happens if an investor passes the test but later changes circumstances, how often retesting would occur, and whether certain categories of private deals would require additional certification beyond a general exam. The reporting so far also does not provide draft regulatory language or timelines for any legislative or rulemaking path.

Looking ahead, the key question is whether Armstrong’s proposal will translate into a concrete policy blueprint that can attract regulators, lawmakers, and industry support. Investors and consumer advocates will also watch for how any literacy-based framework balances access with investor protection, and what standards would be used to determine whether a candidate’s knowledge is sufficient for the risks of private-company investing.