Coinbase CEO Proposes Financial Literacy Test to Replace Accredited Investor Rules
Coinbase CEO Brian Armstrong has called for a financial literacy test to replace the current accredited investor rules, labeling them as 'outdated' and a 'regressive tax' that favors wealthy investors. The existing system, established by the SEC in 1982, requires investors to have a net worth of over $1 million or an annual income of more than $200,000 to access private placements.
Armstrong argued that this wealth-based threshold has nothing to do with investing sophistication and instead locks retail investors out of wealth-building opportunities. He proposed a test that would include topics such as dollar-cost averaging, financial statements, position sizing, and how to react in market downturns.
The Coinbase CEO used the example of a hypothetical $100 investment in Anduril's Series C round to illustrate what reform could unlock for individual investors. He also mentioned that developing the test would be challenging due to the variety of investing philosophies, but that 'a common set of beliefs and best practices' could be agreed upon.
The comments come as Coinbase launched pre-IPO perpetual futures contracts on companies like SpaceX (SPCX), available only to non-U.S. users at the moment. The firm plans to launch this product in the US in partnership with the SEC to advance its goal of granting retail investors access to this type of investment product.