Essay · Markets & enterprise
Protection by transparency, not exclusion
The accredited-investor rule decides who can invest by wealth, not understanding. Reforming it is the easy part. The deeper fix is to rebuild the rails so transparency is native — and let access and accountability rise together.
The gate
Jason Calacanis recently made the case that a million people should be able to put $100 each into the next SpaceX or Uber — and that the SEC's accredited-investor framework stands in the way. He's directionally right that the gate is wrong. But the reasoning is thinner than it sounds, and simply opening the doors — his implied fix — would invite the very harm the rule was meant to prevent. The rule is worth a close look; so is what should replace it.
To invest in most private offerings, U.S. law requires you to be "accredited": roughly, $200,000 of annual income or a $1 million net worth excluding your home. The premise is protection. The effect is exclusion by wealth, not by understanding. A schoolteacher who has read every annual report for a decade is locked out; an heir who has read none is waved in. The rule does not measure who comprehends risk. It measures who can afford to lose.
A complexity tax dressed up as protection
That is the tell. The accredited line is a complexity tax dressed up as protection. It keeps ordinary people out of early private equity — the ownership stake closest to where value is created — while leaving them free to day trade, buy leveraged and inverse ETFs, trade options, and pile into whatever is marketed hardest. We bar people from the earliest ownership and wave them toward the riskiest trades.
There is a quieter cost. A rule that protects you by removing the choice also removes the chance to learn. We do not build judgment by forbidding people from practicing it. Agency and competence grow together or not at all — strip the first and the second never arrives. And the habit compounds beyond markets. A system that keeps deciding what people cannot handle teaches them to expect protection and to fear failing on their own. That mindset — that someone else should stand between us and risk — is its own slow tax on a prosperous society.
The door is already open a crack
Here is what defenders of the rule rarely mention: the principle has already been conceded. Since 2020, the SEC has let people qualify as accredited by holding certain securities licenses — by knowledge, not net worth. The door to a competence standard is already open a crack. The question is no longer whether understanding can stand in for wealth. It is why we stop at a crack.
The bigger problem is the machinery
But swapping one test for another is too small a fix. The deeper issue is that the entire rulebook — public and private — was built for a world of paper, gatekeepers, and after-the-fact disclosure. Quarterly filings. Intermediaries who exist to vouch and to file. Compliance bolted on after the transaction and audited in arrears. It is archaic, and we keep patching it rather than rebuilding it.
The fix is an AI-and-simplicity problem
This is where the answer falls squarely into the pattern I keep returning to: simpler systems, enabled by broadly adopted intelligence. The technology now exists to make transparency and accountability native to the rails — disclosure built into the transaction itself, machine-verifiable, updated in real time rather than reconstructed every quarter. The same infrastructure that opens access can enforce the rules. Protection by transparency, not by exclusion.
Part of that foundation is identity. Imagine a single, government-backed way to confirm that a person or entity is who they claim to be — one verified identity that carries across uses: confirming ownership, settling payments and taxes, meeting know-your-customer checks, even establishing who is acting when an AI acts on someone's behalf. Today each of those is rebuilt, badly, in a dozen silos. A common identity layer would let transparency and accountability ride on top of it, instead of every market reinventing the plumbing.
Picture the inversion. Instead of a wealth gate at the front door and a paper trail audited a year later: a standard anyone can meet — clear, real-time visibility into what you are buying, who is selling, and what the risks are — enforced by the system at the moment of the transaction. Fewer middle layers vouching, filing, and extracting value. More capital reaching the people actually building. Risk and information aligned with the person who bears them. That is more protection and more access at once, which the current frame insists is impossible.
The case against
The strongest objection is real. Private markets are where information is most asymmetric and fraud is easiest, and retail investors have been fleeced there before. Open the door carelessly and you invite predation. A competence test is not neutral either — someone designs it, and it carries its own gatekeeping and its own value judgments. And technology is not automatically a liberator; the same rails could be built to add a new opaque layer instead of removing the old one. None of this is hypothetical.
What this argues for is not keeping the wealth gate. It argues for building the transparency rails well — and for watching whether broadened access actually lifts the floor or just invents new ways to be fleeced. That is the thing to measure. If transparency-based protection turns out not to protect, I would change my mind.
The reform that fits the moment
The wealth gate did not come from bad intentions. Regulators generally believe the rules they write are protective, and often they are. The trouble is what grows up around good intentions. Industry learns to use them — to keep commissions high and fees complex enough that ordinary investors cannot easily compare them, and to keep the most direct opportunities inside a smaller circle. Capture rarely looks like corruption. It looks like complexity that happens to benefit the people who maintain it.
We can do better than a wealth gate — not by removing protection, but by changing its form: from exclusion to transparency, from gatekeepers to rails, from a test of who can afford to lose to a standard anyone can meet. The capability already exists. What is missing is the will to retire the machinery we have outgrown.