Full steam ahead on House reconciliation effort

Topline

• Reconciliation effort yields initial bill text

• Carta launches PE Regulatory Insights

• Tariff uncertainty continues 

• VC Regulatory Playbook—2025 update

• Quick hits

• Carta Policy in Chicago and NYC—come see us!

Reconciliation effort yields initial bill text

Following the two-week congressional recess, House Republican lawmakers are negotiating the details on how to pay for their tax package. House Speaker Mike Johnson has repeatedly pushed for House passage of the consolidated package by Memorial Day, and Treasury Secretary Scott Bessent separately called for both chambers to pass the marquee legislation by July 4. Under the budget reconciliation instructions—which allow Congress to pass a tax bill with simple (Republican) majorities—many committees need to identify spending cuts to pay for extending and expanding tax cuts. Some of those cuts make it politically challenging to pass a bill, including cuts to Medicaid. 

Committee action underway: Seven of the 11 House committees with jurisdiction over parts of the reconciliation measure marked up their reconciliation instructions this week, with the balance expected to follow in the next week or two. The signal to watch: the House Energy & Commerce Committee, which is tasked with finding $880 billion in cuts within its jurisdiction. To meet its deficit reduction instruction, this is widely expected to include controversial reductions in Medicaid funding—a source of contention among moderate Republicans.

Impact on tax reform: The contours of tax reform legislation will be determined by the level of spending cuts other committees are able to achieve. If they fail to meet the number, the tax-writing Committee will need to find other offsets, potentially opening up carried interest and Qualified Small Business Stock (QSBS). We are working to defend these provisions. 

What’s next: The negotiations put the entire tax code on the table. Carta remains actively engaged on several fronts critical to the innovation ecosystem, particularly the inclusion of R&D expensing and the preservation of QSBS tax treatment. Both remain in good shape, but the situation also remains dynamic, and carried interest remains in the crosshairs. 

Carta launches PE Regulatory Insights

 The Carta Policy Team is launching a new series that provides deep dives into the changing PE policy landscape, breaking down key issues, decoding the players and power dynamics, and offering actionable insights. Check out our first installment on tax policy, where we focus on provisions important to the PE ecosystem like carried interest, R&D expensing, and 199A and outline the broader contours of the tax reform debate.

Check it out here.

Tariff uncertainty continues

Markets have steadied in recent weeks following a period of heightened volatility triggered by President Trump’s “Liberation Day” tariff announcement, yet concerns over trade policy remain front and center in Washington. Wednesday’s GDP report revealed that the U.S. economy contracted at an annualized rate of 0.3% in Q1 2025—the first quarterly decline since early 2022. While some components of domestic demand showed resilience, the headline contraction underscores the disruptive impact of ongoing tariff uncertainty.

Focus on China: While the administration paused reciprocal tariffs for most nations until July, the cumulative 145% tariff on most Chinese products remains in place, along with the 125% Chinese duty on U.S. imports. President Trump and his advisors have acknowledged the current levels are too high and unsustainable, though the status of any communications or negotiations between the two countries remains murky at best.

Limited relief: There were some signs of softening this week; the White House released an executive order to limit the cumulative effect of reshoring tariffs on steel, aluminum, and automobile parts as well as the fentanyl tariffs imposed on Canada and Mexico. Industry is also ramping up efforts to push for further relief, particularly for small businesses. 

Why it matters: Ongoing shifts and negotiations surrounding tariffs, including the baseline 10% levy and particularly high reciprocal tariffs on countries like China, continue to create significant uncertainty for businesses. This lack of clarity and resulting instability complicates planning and operations, which has led to pauses in M&A and IPO activity crucial for growth and liquidity within the innovation ecosystem.

What’s next: While administration officials signal current levels may be unsustainable and subject to change, any timeline around negotiations remains uncertain. The GDP report did not reflect Trump’s most aggressive tariff policies, which have led to historic market volatility and declining consumer confidence and business sentiment. Trump has kept most Republicans in line thus far, but if economic conditions continue to worsen, expect more fracturing in the GOP conference, which could make it harder to advance bigger-ticket items such as tax reform that will require almost unanimous support.

Carta’s VC Regulatory Playbook: 2025 update

The private market regulatory landscape is evolving. Even the most experienced fund managers have a hard time keeping up with the pace of change. While the SEC’s regulatory posture toward private markets may be shifting under the new administration, VC funds and their portfolio companies still have a web of compliance obligations to navigate as they raise and deploy capital.

We’ve heard from funds that it would be helpful to have a full readout on the state of the venture capital regulatory landscape—a policy handbook that they could consult as needed. So we created one.

Download the latest version of Carta’s VC Regulatory Playbook here.

Quick hits

• Senate eyes May vote on stablecoin legislation. Senate Majority Leader John Thune has initiated a process to expedite Senate consideration of its stablecoin legislation—the GENIUS Act. The text has also been updated to include new anti-money laundering and consumer protection provisions to help attract more support from Democrats. The House could also move on its stablecoin bill—the STABLE Act—in the coming weeks, though differences would need to be reconciled between the two measures before a stablecoin framework could be signed into law.

• Crypto top priority for SEC chair: In his first public remarks since taking office, SEC Chairman Paul Atkins addressed the Crypto Task Force's April 25 roundtable, highlighting that crypto innovation has been stifled due to regulatory uncertainty fostered by the agency. Crafting a fit-for-purpose regulatory regime for crypto is a top priority, and Atkins believes the agency can move forward under its existing authority without Congress. 

• Federal Reserve withdraws Biden-era crypto guidance. Banks will no longer be required to notify regulators in advance with respect to crypto-related activities or seek permission before engaging in stablecoin activities. The Fed also rescinded previous statements warning institutions about the risk posed by crypto asset exposure.

• SPAC comeback. While heavy volatility has frozen most traditional IPOs, the SPAC market is showing signs of a rebound as private companies are looking for exits to meet capital and liquidity needs. 

• U.S. House panel drops bid to remove FTC's antitrust authority. The proposal would have transferred these responsibilities to the Department of Justice, who also shares antitrust enforcement jurisdiction. While the provision was dropped from the reconciliation package, standalone efforts to consolidate authority may continue.

Carta Policy coming to Chicago, New York

Carta Policy will be in Chicago on May 13-14 for SuperReturn and in New York on May 15 for RAISE Global and we'd love to see you! As we often say, engagement matters and now is the time to do it. Feedback from the ecosystem is critical to building a regulatory and tax infrastructure that bolsters and expands the private capital ecosystem. 

If you're in the area and would like to catch up, please let us know.

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