I'm not in favor of that, actually. A single set of regulations is much better than 50 different ones. A similar approach was tried when the credit card market was liberalized, and the outcome was that all the CC issuers just set up Delaware corporations because Delaware had no cap on the amount of interest issuers could charge.
(EDIT: it's not quite that simple - besides Delaware, Utah and South Dakota also offered regulatory environments with no 'usury' caps on interest rates. Please read 'Delaware' as shorthand for 'states with lender-friendly regulations' and bear in mind the summary nature of this already-too-long post. Thanks.)
Now, nobody is forced to acquire or maintain a debt with a credit card, but on the other hand it's rather difficult to build up a credit rating without using credit. To build up a good credit rating, you need to demonstrate the ability to take out a lot of credit. Not having a good credit rating, or not using credit at all and thus not having a rating, imposes all kinds of annoying difficulties - leasing an apartment usually requires a credit check, so do many kinds of employment, and so on. You are administratively penalized, with a resulting economic cost, if you do not show a willingness to incur a significant amount of debt. To my mind this is perverse.
But if you accept the fact and participate by opening and maintaining a credit facility, Delaware law gives card issuers a great deal of freedom to change the terms of your credit arrangement by fiat, such as raising or lowering your credit limit on a whim. Quite a number of people with perfectly good credit who made only cautious use of their credit facilities have lately received letters from their card issuers advising them that their limits had been adjusted sharply downward, often to just above the amount of credit outstanding; as a direct result, their credit score has in many cases been simultaneously adjusted downward because they are suddenly using a much higher percentage of their available-but-newly-reduced credit, despite not having spent any extra money. Unsurprisingly, a good many people have inadvertently found themselves exceeding the newly-reduced credit limit, incurring a $35 or more fee each time (which is added to the amount outstanding) and causing their score to be revised downward (in addition to any other downward revision which took place as a result of the limit reduction). And having your credit score go down is typically cited as justification for a lender to increase the rate of interest you must pay. Indeed, many lenders cite such changes on other lenders' credit facilities as justification to adjust their own terms, regardless of an individual's payment history on their own account.
Furthermore, as there are no interest caps under Delaware regulation, many people find themselves saddled with an APR of up to 30%, at a time when the federal funds rate is effectively zero. This isn't illegal but it is massively punitive. It's many times more than the IRS would demand on an outstanding tax debt, for example. Especially so if you were making relatively cautious use of your available credit, only for your card issuer(s) to cut your credit limit in half and jack your rate up from a 'reasonable' 17 or 18% to 29.99%, as described above. Through no fault of the borrower and with no change in their income and expenditure patterns, creditors have had, and freely exercised, the ability to significantly increase a borrower's immediate liability while simultaneously raising their risk of default from probabilities of 0.5 all the way up to 1.
My personal experience in recent years consists of opening a small credit facility after having avoided any debt for years, managing it somewhat poorly (though in mitigation, this occurred after an unforseeable medical emergency requiring surgery), being penalized as a result, and paying off and cutting up the cards later that year. Now I am fairly financially secure again and unsurprisingly being bombarded with more offers than a sailor on shore leave.
A family member with outstanding credit and and an absolutely perfect payment history (ie no rolling balance at all - in the CC industry such people are referred to as 'deadbeats' because they pay off their credit in full every month and thus generate no income for the issuers) saw their limits revised sharply downwards to just above the amount of the balance they typically accumulate during their grace period, presumably in the hope that they'd bump against the newly-lowered ceiling and set off revenue-generating triggers such as overlimit fees.
This is a very long way of saying that if we shift to a competitive regulatory model, the result will very likely be a stampede towards whichever jurisdiction offers the greatest opportunities for unilateral advantage. Startups will find themselves unable to attract investment participation on any other terms, but will have to set up a shell company and issue their PPM in whichever state confers the greatest advantages to investors. In other words, almost nobody will be prepared to cut a check unless the startup is incorporated in XX state whose regulations will be binding upon founders seeking capital. If the experience of the credit industry is any guide, this is a recipe for reverse takeovers and worse, by allowing investors to change the terms of their investment by fiat, file a claim of default or material breach of the investment terms about 30 seconds later, eject the founders and capture the IP.
Sounds apocalyptic, eh? Sure it does, but few people (other than those lobbying for it) foresaw the evolution of the credit industry when interstate barriers were lifted. Well, you say, investors won't be able to buy in if startups refuse to subject themselves to such onerous terms by setting up and issuing their PPM in such jurisdictions. Riiight....like you can tell the bank you'll only accept credit issued under California law (which IIRC does not allow the freedom to set any interest rate the issuer likes) instead of Delaware law. When you need a significant amount of external capital, you have to go where the money is.
Now, I do agree with the poster elsewhere on that thread who said that changes in the law might encourage startups focus more on organic growth than early-stage capital formation. That might indeed be a Good Thing. But sometimes you have to spend money to make money, and choosing the organic growth route comes with an opportunity cost which is an indirect barrier to entry. While you're feeding and watering your green shoots and waiting for your revenue to grow from a trickle to a stream, there's a much greater likelihood of an astute and well-financed competitor spotting the new market you have created and buying up all the surrounding territory without the bother of going through the acquisition process.