Biden holds firm and Republicans release platform

Topline

• President Biden insists he will stay in the race…and win

• Republican platform on tax, crypto, immigration

• SEC latest regulatory agenda focused on private markets

• Crypto remains top of mind on Capitol Hill

• House Republicans call for review of agency actions in the wake of Chevron decision

President Biden insists he will stay in the race…and win

President Biden remains committed to staying in the race, but a growing list of elected officials are calling for him to withdraw. He is the only person who can make the decision, as the nominating delegates are pledged to him, and he would need to withdraw to open up the process. Despite that, pressure from others—especially elected members fighting tough races that will determine the fate of the House, Senate, and statehouses— will inform the outcome, so watch to see if demand for his withdrawal grows strong enough to break the dam. 

Republican platform previews familiar priorities

As Republicans prepare for next week’s convention, the Party released its 2024 policy platform, outlining Republican positions on key issues:

• Taxes: Prioritize making permanent and expanding several expiring provisions of the Tax Code and Jobs Act (TCJA), including the enhanced standard deduction and expanded child tax credit.

• Artificial intelligence: Bolster emerging industries by repealing the Biden Administration’s Executive Order on AI and pushing policies rooted in “free speech and human flourishing.”

• Crypto: Oppose a central bank digital currency (CBDC), defend bitcoin mining, protect self-custody of digital assets, and limit government oversight of digital transactions. 

• Immigration: Stem illegal immigration and prioritize merit-based immigration over asylum.

• Supply chain and jobs: Revive the industrial base and protect critical infrastructure while strengthening the U.S. manufacturing base and bringing home critical supply chains that bolster national security and economic growth.

Why it matters: The platform is a messaging document, and the 2024 Republican edition aligns heavily with the rhetoric favored by former President Trump and the right wing of his party. These talking points will dominate next week’s Republican convention, where Trump will be formally nominated and announce his vice presidential candidate.  

New: Carta Policy Insights: Decoding the Data

This week, the Carta policy team published the inaugural edition of Carta Policy Insights: Decoding the Data where we analyze trends in private markets to inform public policy solutions.

Our first edition highlights the disproportionate distribution of venture capital (VC) across the country while demonstrating opportunities for policy changes to broaden venture capital, expand investor access, and unlock innovation. 

Key findings include: 

• State dominance: California and the West retain a historical edge in VC funding.

• Per capita leaders: Massachusetts and DC have high per capita VC fundraising.

• Wealth correlation: 7 of the top 10 VC fundraising states have per capita income above the national average.

• Accredited investors: Density (more than quantity) of accredited investors appears to influence per capita funding of VC.

New SEC regulatory agenda focused on private markets

The administration released its latest regulatory agenda, which includes top priorities for the SEC. Private market reforms remain a priority for the agency, though recent court decisions and the upcoming election may limit the feasibility of achieving these goals. Below are a few highlights and potential implications for the ecosystem:

• Private fund advisers: The SEC anticipates finalizing proposals that would impose new compliance obligations on SEC-registered private fund advisers related to cybersecurity risk management, vendor due diligence, and ESG disclosures. 
  
  Outlook: The Fifth Circuit’s decision to strike down the private fund adviser rules-–in addition to the Supreme Court repeal of Chevron deference—will limit the SEC’s authority to impose new obligations on private equity and venture capital fund managers. While SEC has signaled it would re-propose some of its more controversial proposals—namely the predictive data analytics and custody proposals—the other private fund adviser items will need to be evaluated in light of the recent court decisions (and private fund trades are pushing the Commission to scrap these proposals as a result). 
  

• Capital access: The SEC anticipates proposing reforms to Regulation D, the primary vehicle through which companies and funds raise capital in private markets, as well as raising the financial thresholds to qualify as an accredited investor. 
  
  Outlook: If adopted, these actions could increase friction in the capital-raising process and lessen the number of individuals who would qualify and be able to access private market investment opportunities, reducing an important source of capital for founders and fund managers, particularly in lower-income regions that may lack access to established capital-raising networks. No action is anticipated until next year, which means the election outcome will impact whether these items advance. The SEC is expected to finalize a modest inflation adjustment to the qualifying venture capital fund parameters.
  

• Private companies: The SEC anticipates proposing changes to the way “holders of record” are counted under Section 12(g), which could push more private companies into the public markets before they are ready, reduce competition, and limit investor access if the use of SPVs and other fund structures is constrained. Commissioners have also signaled interest in imposing a  public company-like disclosure regime through changes to Regulation D.
  
  Outlook: Similar to the priorities impacting capital access, no action is anticipated on either provision prior to the election. Further, Chevron repeal will make it harder for the SEC to make changes to 12(g) without further congressional authorization.
  

• AML/CFT: FinCEN and the SEC have proposed rules to expand anti-money laundering/countering the financing of terrorism (AML/CFT) regulations to investment advisers, which would include SEC-registered private fund advisers and venture capital fund advisers who are exempt reporting advisers. 
  
  Outlook: FinCEN is expected to adopt final rules to expand AML/CFT obligations to investment advisers later this summer, though other proposed enhancements will likely be delayed until next year.

Crypto remains top of mind on Capitol Hill

Not only did crypto policy make its debut in the Republican platform, but it was a prominent theme in Washington this week. Advocates participated in meetings across the Hill and closed-door meetings with lawmakers and administration officials, in addition to a slew of legislative activity:

• Senate Agriculture Committee hearing: CFTC Chair Rostin Behnam pressed senators on the importance of enacting a framework to regulate digital assets during a committee hearing, calling the current path unsustainable. Senator Debbie Stabenow, who chairs the Senate Agriculture Committee, is working on legislation to regulate the digital commodity spot market. Senate Banking Chair Sherrod Brown, a crypto skeptic, has also expressed openness to moving a crypto market structure reform bill.

• SAB 121: The House failed to overturn President Biden’s veto of SEC’s staff accounting bulletin 121, which requires digital assets held in custody to be booked on the balance sheet unlike other custodied assets, disincentivizing financial institutions from participating n the crypto custody business (though the SEC has reportedly been working with banks on a one-off basis to bypass these requirements). Although the measure passed 228-184 with the support of 21 Democrats, it failed to reach the ⅔ threshold required to overturn a presidential veto. Members may attempt to repeal the SEC guidance through other legislative paths. 

• Nominations hearing: Senators expressed the need for crypto firms to have access to banking services to the FDIC Chair nominee, while criticizing the SEC hostility toward the industry.

Why it matters: Political realities have changed the legislative trajectory for digital asset regulation as once crypto skeptics have shifted their stance. Even the SEC—the industry’s biggest foe—seems to be softening. Despite the momentum and growing bipartisan support, it is unlikely a comprehensive framework gets done this Congress, but this activity builds the foundation for action next year.

Tune in for Carta Policy Live on July 19

The administration recently proposed its outbound investment rule, which would curtail U.S. investment related to key geographical regions that fund and support the development of key technologies. On this edition of Policy Live, the Carta team will be joined by a special guest, Jesse Sucher, former Senior Adviser to the Assistant Secretary for Investment Security at the U.S. Department of the Treasury, to discuss the rule.

House Republicans call for review of agency actions in the wake of Chevron repeal

This week, House Republicans seized on the Supreme Court’s reversal of the Chevron doctrine to push back on administration actions. House Republican committee chairs sent letters for 14 of the 15 cabinet-level departments and another 22 agencies, asking for information on how the overturning of Chevron would influence actions, litigation, and enforcement, particularly as they relate to the White House’s climate, clean energy, and environment priorities. 

The impact of the overturning of Chevron is already being felt. This week, the Fifth Circuit court heard oral arguments in a case seeking to overturn a Biden administration ESG investing rule, which would enable private pension funds to consider ESG factors in investment decisions as a “tiebreaker” if other financial risk/reward considerations are determined to be equal. Last September, a district court in Texas dismissed the case in favor of the Department of Labor, citing the Chevron doctrine.  

Why it matters: While agencies continue to grapple with how to respond, the courts will begin to step in as more legal challenges are expected to follow. The ESG investing rule challenge will be the first test of how courts will approach statutory interpretation post-Chevron, and to what extent agency guidance influences the decision. A patchwork of judicial interpretations could lead to uncertainty across the federal regulatory landscape, and agencies and policymakers will have to reevaluate the legislative and rulemaking process to reduce ambiguity and minimize conflicts. 

Policy Playbook: How the 2024 Election Could Shape Private Market Policy

Policy is infrastructure. From tax reform to private market regulation, the upcoming presidential and congressional elections will influence private market policy outcomes that impact how funds and small businesses operate. Carta’s Policy team and policy leaders will preview how the elections could shape key issues. The discussion will cover:

• Key policy areas to watch in 2025, including tax reform and capital market regulation

• How funds and small businesses can best navigate the shifting political and policy landscape

• How Carta and others private market leaders are engaging to drive the policy debate

News to know

• Judge backs challenge to FTC’s noncompete ban, at least for now (New York Times)

• California takes lead on regulating private equity health deals (Bloomberg Law)

• SEC ends probe into Paxos over Binance USD token (WSJ)

• IRS finalizes new regulations for crypto tax reporting (TechCrunch)

• Wall Street wins after Powell signals changes to contentious bank rules (Bloomberg)

• FinCEN issues proposed rule to strengthen and modernize financial institutions’ AML/CFT programs (Department of Treasury)

Upcoming events

• July 17 - Carta event: Startup Fundraising 101: Crafting a Winning Pitch

• July 23 - Carta event: NYSE: Getting your Company IPO Ready

• July 24 - Carta event: Essential Tools for Startup Success: Equity Management

• July 25 - SEC event: OMWI Fireside Chat with Chair Gensler

• July 30 - SEC event: Small Business Capital Formation Advisory Committee Meeting

• July 31 - Carta event: Policy Playbook: How the 2024 Election Could Shape Private Market Policy

Sign up below to receive Carta’s Policy Weekly Brief: