Carta-backed legislation to bolster VC advances in Congress

Topline

• HFSC advances bipartisan bills to bolster and broaden VC ecosystem

• House unanimously approves accredited investor examinations

• FinCEN (finally) delays implementation date for AML rules for investment advisers

• White House advances AI goals with action plan and EOs

• Quick hits

HFSC advances bipartisan bills to bolster and broaden VC ecosystem

With strong bipartisan support, the House Financial Services Committee (HFSC) advanced several bills this week that could significantly expand access to capital for founders and fund managers across the country.

Developing and Empowering our Aspiring Leaders (DEAL) Act: Expands the category of qualifying venture investments to include fund-of-fund and secondary investments. 

• Why it matters: Today, VC funds are largely limited to direct investments in portfolio companies. Expanding the ability for funds to invest in other VC funds could help drive capital to emerging managers, as well as increase diversification and returns for investors. Expanding secondary investments could help ease liquidity pressure, recycle capital back into the ecosystem, and help startup founders and employees monetize their equity compensation. 

Improving Capital Access for Newcomers (ICAN) Act: Increases the size and investor limits for qualifying venture capital funds.

• Why it matters: Under Section 3(c)(1), private funds have long been barred from raising capital from more than 100 beneficial owners. In recent years Congress created a “qualifying venture capital funds” exemption to allow smaller fund managers to raise capital from up to 250 investors, but fund size was capped at $12M, limiting the utility of this provision. The ICAN Act would expand the fund size to $50M and increase the investor limit to 500, enabling smaller funds to assemble competitive funds and raise capital from more investors.

Bigger picture: The venture capital ecosystem powers American innovation and economic growth, but unless we modernize our policy infrastructure, the benefits of this economic and innovation engine will be limited. These bipartisan solutions will not only help bolster the VC ecosystem, but will broaden its benefits to more investors, more entrepreneurs, and more communities.  

Engagement matters: These legislative proposals are not new ideas, but in recent years, they have failed to attract bipartisan support. Carta and our coalition partners have not only been educating policymakers on both sides of the aisle on the merits of the proposals and the VC industry more broadly, but directly engaged to negotiate the contours of the bills to reach a favorable, bipartisan solution. Once we agreed on text, we also delivered on the politics: In advance of the markup, Carta led a coalition of 13 innovation-focused organizations—both at the national and regional levels—to show unified support of these measures. And these efforts made a difference: The committee advanced these measures with a nearly unanimous vote. 

What’s next: Advancing these bills out of HFSC is only the first step; they still need to pass the full House, and pass the Senate with 60 votes to be signed into law by the president. This will require broad bipartisan support—the strong HFSC vote set that foundation. This is an incredible first step to getting these policies across the finish line, but there is more work to do. We have to keep the momentum going.

House passes bipartisan accredited investor legislation…now to the Senate

The House advanced legislation by voice vote that would expand the ability for individuals to qualify as accredited investors by passing an SEC-developed exam. Expanding on-ramps based on knowledge rather than wealth and income thresholds could enable more investors to invest in private capital. This is an area SEC Chairman Paul Atkins has signaled the agency would focus on as well. 

FinCEN delays implementation date for AML rules for investment advisers

The Carta Policy team has been predicting this for some time, but a formal announcement has finally happened. The Financial Crimes Enforcement Network (FinCEN) provided private equity and venture capital fund managers the clarity they have all been waiting for—the Jan. 1, 2026 compliance date for the new AML rule for investment advisers will be postponed until at least Jan. 1, 2028. FinCEN also expects a broader review of the scope of these requirements to ensure compliance burdens for private fund advisers reflect the risk profile of the industry.

Why it matters: While many advisers have AML/KYC protocols in place that incorporate some of the required elements of the new rule, this formal regulatory regime would have drastically shifted the standard, imposing significant compliance obligations on private fund advisers—both SEC-registered investment advisers (RIAs) and exempt reporting advisers (ERAs). The rule’s requirements—customized programs, independent testing, staff training and dedicated compliance resources, suspicious activity reporting (SARs)—would have increased compliance time and costs. The requirements would have applied across all funds, despite the size or registration status: Venture capital and smaller private fund managers would have had to bear the same compliance burden as larger, well-resourced RIAs, potentially creating a disproportionate compliance cost and burden for smaller fund advisers. These are all areas that will likely be revisited as FinCEN conducts a broader review of the rule’s requirements.

What’s next: While the rules may be delayed and undergo substantive change, private fund advisers will likely be subject to a formal AML regime in the future. However, the industry has an opportunity to shape what that program looks like through the future comment process. In the meantime, financial institutions will likely require funds to have AML/KYC policies in place, and funds will continue to be subject to global-sanctions screening requirements. Carta can help funds meet these requirements, and the Policy Team will continue to track developments and engage regulators to shape compliance in a way that is reflective of the private capital ecosystem. 

White House advances AI goals with action plan and EOs

On Wednesday, the White House published Winning the AI Race: America’s AI Action Plan, a roadmap for how the administration plans to secure U.S. leadership in artificial intelligence. At a high level, the plan focuses on prioritizing deregulation and innovation, while advancing AI infrastructure development. Within its approximately 90 federal policy actions, the directive calls for expediting permitting for AI infrastructure, workforce training for high-demand roles, and the development of regulatory sandboxes at the SEC and other regulators. The plan also directs agencies to evaluate how state AI regulations interfere with federal authority or may impose liability that could unduly burden AI development. 

This is the Trump administration’s most comprehensive action on AI policy to date, and the president signed three news EOs to support its implementation: “Promoting the Export of the American AI Technology Stack,” “Accelerating Federal Permitting of Data Center Infrastructure” and “Preventing Woke AI in the Federal Government.”

 Quick hits

• Senate Republicans issue crypto market structure framework draft. Senate Republicans released their own crypto market structure framework draft, the Responsible Financial Innovation Act (RFIA). The RFIA deviates from the House-passed CLARITY Act, granting primary regulatory authority to the SEC as opposed to the CFTC, but creates a new category—ancillary assets—to exclude certain tokens from the securities law. The RFIA would also direct the SEC to replace the Howey test with a new investment contract rule, introduce a streamlined framework for token offerings, and create a micro-innovation sandbox to encourage experimentation by startups in a controlled regulatory environment. The framework is open for public feedback until August 5. 

• House Small Business Committee unanimously approves legislation to promote access to capital for small businesses in critical tech and underserved markets. The Investing in All of America Act would expand access to capital for small businesses in rural and underserved areas or those operating in national security or critical tech sectors by excluding those investments from the SBIC leverage cap. ICYMI: Carta’s head of policy Anthony Cimino testified in favor of this legislation as a means to increase access to capital outside of traditional funding hubs.

• SEC Small Business Capital Formation Advisory Committee discusses Regulation A improvements and the role of finders. Both of these topics will likely be part of Chairman Atkins’s capital formation agenda, where we could see a focus on enhancing liquidity and improving the utility of Regulation A, as well as efforts to enable finders to engage in limited capital-raising activities without registering as broker-dealers. 

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