3 Levers the SEC Can Pull to Democratize Access to Private Markets

How could the Securities and Exchange Commission make private investments more accessible to individual investors?

For decades, private market investments have been out of reach for the average investor. Despite the attractiveness of private assets and their ability to provide diversification in a long-term portfolio, these investments were available only to institutions, high-net-worth individuals, and those willing to sacrifice liquidity for long periods of time.

However, the current SEC leadership has expressed interest in broadening access to private investments.

There are three key ways they could accomplish this goal:

1. Changes to the “accredited investor” definition.
2. Changing crowdfunding thresholds.
3. Approving and facilitating retail products containing private investments, particularly liquid alternatives and target-date funds.

Here’s what each of these paths to broadening private investment access would look like.

Should the SEC Make the Accredited Investor Definition More Inclusive?

The SEC last broadened the “accredited investor” definition in 2020 by allowing individuals with certain sophistication credentials like Finra certifications (Series 7, Series 65, and Series 82) to qualify without meeting the income and net worth thresholds.

The SEC could continue down this path of expanding the knowledge-based ways to qualify as an accredited investor. They have the authority to allow additional knowledge tests to demonstrate financial proficiency. And the Small Business Capital Formation Advisory Committee’s recommendations have encouraged them to consider knowledge-based qualifiers.

Similar efforts to expand the accredited investor definition have been taken up by Congress. Earlier this month, the House passed the Equal Opportunity for All Investors Act of 2025, which would expand the definition of accredited investor by directing the SEC to create a test that individuals can pass to qualify for accredited investor status, regardless of their wealth or income levels.

In addition to expanding knowledge-based qualifications, suggestions have been made to rethink income and net worth thresholds and how they are applied.

At the SEC’s 44th annual Small Business Forum, Commissioner Mark Uyeda questioned the “all or nothing” approach to the definition and considered the idea of every individual being able to invest at least a small amount into private companies each year.

By adopting a continuum-based approach, the SEC could allow investors at varying income levels to invest a percentage of their net worth on an incremental income scale—a recommendation the SBCFAC supported.

This change would expand access to private investments for investors, while also setting guardrails in place to encourage diversification.

Should the SEC Liberalize Crowdfunding Limits?

Crowdfunding allows investors to invest in private companies without needing to be accredited.

This approach already functions on a continuum: Investors can invest from $2,500 to as high as $90,000 in a given year, depending on their annual income and net worth. This continuum allows investors to engage in the private market with limited exposure to emerging companies.

The SEC could further expand access through crowdfunding by lowering thresholds and increasing the limits on the investment caps per year.

Should the SEC Approve More Retail Products Containing Private Investments?

The SEC can also democratize private assets by approving retail funds that include private investments within them and making it easier through regulatory changes for registered funds to include private assets (private credit or private equity, for example).

The SEC is considering a regulatory change in the closed-end fund space relating to the 15% cap on illiquid assets for the closed-end funds that are marketed to retail investors. This would make it easier for investors to hold investments with long lockup periods.

Such liquidity relief or other regulatory changes would also be helpful to target-date funds considering the private space. As we have previously explained, illiquidity and lack of transparency are the main challenges such vehicles face in incorporating private assets.

Inclusion within target-date funds, in particular, would facilitate access to private investment through retirement accounts, given their prevalence in 401(k) plans as the default option.

How the SEC Can Open Private Markets to Investors

The SEC has the opportunity and the capability to increase investor access to private markets through three key avenues: expanding the accredited investor definition, adjusting crowdfunding thresholds and limits, and enabling funds that include private investments in their portfolio.

Time will tell what pathways the SEC chooses to focus on, but access has been expanding and interest in private assets continues to grow.