The INVEST Act: Will Congress Finally Open Private Markets to the Other 96%?

By Jeff Barnes, MBA | Angel Investors Network

June 24, 2026 · Regulatory Compliance

The Rule That Locks Out 96% of America

Venture capitalist Jason Calacanis said it plainly on the All-In podcast in June 2026: the SEC's accredited investor rule locks out roughly 96% of Americans from the best private-market returns. He is not wrong. Under Regulation D, only investors who clear specific income or net worth thresholds can buy into most private placements, hedge funds, venture funds, and angel-backed startups. The other 96% are barred by law.

The thresholds are specific. An individual needs $200,000 in annual income in each of the two most recent years, with reasonable expectation of the same in the current year. A married couple needs $300,000 joint income under the same two-year rule. Alternatively, net worth exceeding $1,000,000 qualifies, but the primary residence does not count toward that figure.

These numbers have not changed since 1982. Congress has not touched them in over 40 years. The SEC has made modest adjustments at the margin. A 2020 SEC final rule added registered investment advisers and certain credentialed professionals to the accredited list. See also our breakdown of Form ADV and adviser disclosure requirements for how that registration pathway functions. But the core income and net worth thresholds remain exactly where Ronald Reagan's SEC set them.

The Inflation Accident Nobody Planned

When the rule first applied in 1983, approximately 1.8% of U.S. households qualified. The thresholds were well above median income. The rule did what it intended: it restricted private offerings to a relatively small, financially sophisticated group.

Then inflation ran for four decades. Nominal wages rose. Home equity grew. And because Congress never indexed the thresholds to inflation, the accredited club expanded without any deliberate policy choice. By 2024, an estimated 18.5% of U.S. households qualified.

That growth is an accident. It reflects rising nominal incomes, not any Congressional determination that more people should access private markets. If the original 1982 thresholds were adjusted for inflation through 2024, the qualifying share would fall back to roughly 4%, near the original intent.

The result is a rule that is simultaneously too restrictive for the wrong reasons and too broad for the wrong reasons. A schoolteacher in a high-cost-of-living city may clear $200,000 in income and qualify, even though she has no particular knowledge of private securities. A retired engineer with deep expertise in semiconductor startups but $900,000 in net worth does not qualify. The threshold measures wealth accumulation, not financial knowledge. That distinction matters.

State-level blue sky laws add another layer of complexity for issuers trying to sell across state lines, compounding the friction that keeps private markets inaccessible.

What the INVEST Act Actually Proposes

The Improving New Investments for a Vibrant Economy and Strong Technology Act passed the House on December 11, 2025 by a 302-123 vote. That margin is significant. Bipartisan majorities of that size are rare in the current Congress. The bill moved with support from both sides of the aisle on the explicit argument that restricting private markets to the wealthy is itself a form of financial inequality.

Taft Law's breakdown of the bill identifies four core provisions:

• Knowledgeable employees: Employees of private funds who have meaningful exposure to the fund's investment activities would qualify, regardless of income or net worth. The rule already contains a version of this for registered funds; the INVEST Act broadens it.
• Exam-based pathway: The SEC would design and administer a financial knowledge examination. Passing the exam would satisfy accredited investor requirements without regard to income or net worth. The bill directs the SEC to create the exam; it does not specify content or passing standards.
• Spousal income pooling: Currently, income qualification looks at individuals or couples jointly. The new provision would allow spouses or spousal equivalents to pool income when one partner's income alone falls short of the threshold.
• Expanded institutional definitions: The bill updates which entities qualify as accredited investors by institution type, capturing categories that have emerged since 1982.

The bill now sits in the Senate Banking Committee. As of June 24, 2026, no floor vote is scheduled. The committee has not held a public markup session on this version of the bill. Senate Banking has a full agenda. Reform of the accredited investor definition competes with banking regulation, fintech oversight, and stablecoin legislation for committee time.

Carlton Fields' analysis notes that the bill creates real product development opportunities for private fund managers who have been constrained by investor-eligibility rules. If the exam pathway passes, fund managers could market to a much larger pool of verified-but-not-wealthy investors.

The SEC's Alternative: Registered Interval Funds

While Congress deliberates, the SEC and registered fund managers are building a parallel route. Registered interval funds and tender-offer funds operate under the Investment Company Act of 1940. They can hold private credit, private equity, and other illiquid assets while remaining open to retail investors. Liquidity is restricted. Redemptions are offered on a quarterly or less frequent schedule. But these funds do not require accredited investor status.

In September 2025, the SEC's advisory committee acknowledged real risks in expanding retail access to private markets: information gaps, illiquidity mismatches, and elevated fraud exposure. The committee endorsed registered interval and tender-offer funds as the safest expansion vehicle, precisely because those structures carry disclosure requirements, independent boards, and defined liquidity windows.

The JPMorgan development in June 2026 is the clearest market signal yet. JPMorgan received SEC approval for monthly redemptions on its Public and Private Credit Fund. Monthly redemptions are a structural improvement over standard quarterly gates. They narrow the liquidity gap between public bond funds and private credit vehicles. JPMorgan got this approval under existing law, without waiting for the INVEST Act.

This matters for accredited investors tracking the market. The registered-fund pathway is moving faster than Congressional action. If you want exposure to private credit through a non-accredited-investor vehicle, the product set is growing. If you want direct access to Regulation D offerings, you still need to clear the existing thresholds or wait for Senate action. Our prior coverage of interval fund structures and liquidity mechanics gives a full breakdown of how these vehicles work.

How the U.S. Compares to Other Markets

The U.S. is not the only country wrestling with this question. Other major markets have drawn the line differently.

The UK's self-certification model has drawn criticism for allowing under-qualified investors to tick a box without genuine assessment. The EU's MiFID II approach is more demanding: it requires demonstrated transaction history and portfolio size. The INVEST Act's exam pathway, if well-designed, would be more rigorous than the UK model and more accessible than the EU's portfolio requirement.

The Risk Argument and Why It Cannot Be Dismissed

Expansion advocates sometimes wave off investor protection concerns. They should not. The SEC advisory committee's September 2025 position was measured, not alarmist. It acknowledged a real pattern: private offerings carry less disclosure, longer hold periods, and higher rates of fraud per dollar invested than public securities.

SEC enforcement data consistently shows that Regulation D fraud disproportionately harms smaller investors who lack the due diligence resources of institutional capital. Opening the market to more investors without a corresponding increase in disclosure requirements or investor education does not solve that problem. It scales it.

Liquidity risk is separate from fraud risk, but equally real. Angel deals and venture funds typically lock up capital for 7 to 10 years. Private credit funds may have shorter hold periods, but secondary market access is limited. An investor who qualifies by passing an exam but does not genuinely understand illiquidity exposure could face severe financial pressure if circumstances change. Passing a knowledge test does not guarantee sound judgment under financial stress.

The registered interval fund structure addresses these risks better than simple threshold expansion. A registered fund has an independent board, audited financials, defined redemption windows, and SEC oversight. A Regulation D offering has none of those features. The INVEST Act does not change Regulation D's disclosure rules. That gap deserves attention in the Senate markup process.

Recent litigation has also sharpened the stakes for private market participants. The Supreme Court's 2026 decision in Sripetch v. SEC clarified disgorgement rules in enforcement actions, signaling that the Court is not inclined to weaken the SEC's remedies toolkit even as Congress considers expanding market access. Expansion and enforcement are not mutually exclusive.

Jeff's Take: Knowledge Beats Net Worth, But the Exam Design Is Everything

I have spent years watching capable, analytically sharp people get locked out of deals that would have fit their portfolios well. A retired biotech executive with 30 years of reading clinical trial data and $800,000 in savings is not more dangerous to private markets than a 28-year-old who inherited $1.1 million. The net worth test was always a crude proxy for financial sophistication.

The INVEST Act's exam pathway is the right conceptual move. But the bill gives the SEC enormous discretion in exam design. That discretion will determine whether the door actually opens or merely appears to. If the SEC designs a rigorous, fairly priced exam with transparent scoring, more qualified investors will enter private markets. If the exam becomes a $500 credentialing exercise that tests little more than terminology recall, it will create a compliance checkbox without meaningfully improving investor quality.

History suggests the SEC moves carefully, sometimes too carefully, on retail access questions. The agency's September 2025 advisory committee position was constructive. But advisory committee endorsements are not binding. Rulemaking takes time. And a Senate floor vote is not scheduled.

In the interim, the registered interval fund market is the practical answer for investors just below the accredited threshold. The JPMorgan approval in June 2026 shows that monthly-redemption products are achievable under existing law. Fund managers are building products for this segment because the demand is real and the regulatory pathway exists today.

For accredited investors reading this: the INVEST Act, if it passes, will expand your co-investor pool and likely increase deal flow to emerging managers who can now pitch a wider audience. That is not uniformly good. More capital chasing early-stage deals compresses valuations and increases competition for allocation in top-tier funds. Watch the Senate markup. Watch the SEC's response to any enacted exam provision. The structure of this reform matters more than the headline.

Understanding when advisory shares have real value versus when they are a distraction remains one of the more practical due diligence questions for angels considering deals from newer managers who will benefit from expanded investor pools.

The 302-123 House vote is a real signal. Bipartisan agreement on private market access is not nothing. But signal and law are not the same thing. Watch the Senate.

Author Disclosure: Jeff Barnes, MBA has no personal position in any company, fund, or platform named in this article. Angel Investors Network has no current commercial relationship with any party mentioned. AIN provides marketing and education services, not investment advice. Past performance does not guarantee future results. All investments involve risk, including loss of principal.