A lot of ico's are pure scams; banning them upfront would limit the number of investors to those who are willing to break the law.
Emulating the Chinese government, which rules a country with a much less developed tradition of civil liberties than the West, would be a giant move backwards.
Careful there.
The origins of that expression come from old Rome, "Caveat Emptor". A culture whose pantheon had a common deity for merchants and thieves.
And while we are on the topic of legalised robbery: every time you see someone discourage regulation in the name of "giving the consumer a choice", keep in mind that they are most likely thinking about a more elaborate Hobson's choice.[0]
On that note, children that are overly sheltered grow up to have problems as adults. The same applies to the investing public. And on top of that, they're not children. It's their right, as adults, to do with their own money what they wish.
Disclosure and false advertising regulations, like what applies to herbal supplements, are fine, as they directly address fraud. The centralization of the securities industry, with IPO-related registration requirements, and onerous and privacy-compromising regulations that have to be met for any securities purchase, is not fine. I understand that most tokens don't qualify as securities, and thus won't be affected by SEC regulations, but that doesn't change the fact that securities regulations have a direct and profound negative effect on personal rights, and set a dangerous precedent for far more of the same.
But creating a centralized gatekeeper, and applying Prior Restraint to anyone that hasn't registered and been approved by that gatekeeper, is not a proportionate and just strategy for combating scams. It's preemptive and punishing to innocent people.
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[0] - This I base on personal observation sample. The only ICO I've seen so far that clearly wasn't a scam was Filecoin, which was notable for trying to be as legally compliant as possible. Also, the majority of interest in ICOs I witnessed was of a get-rich-quick kind.
I think 90% of projects are poorly planned and reckless expenditures of capital, and will fail. But none of those qualities make them scams. The people organizing said token sales will destroy their own reputation, and no amount of money is worth a person's reputation. A portion of these people will end up attempting to run away with the cryptocurrency they received from investors, and these people, and only these people, should be pursued by legal authorities.
In terms of regulations, I wouldn't mind some generic disclosure requirements for token sale websites, like a simple warning about the highly experimental nature of cryptocurrency and speculative nature of investments in them, but a blanket ban, or a blanket prior restraint type restriction on anything unregistered and unapproved by a centralized gatekeeper? It would be terrible for basic internet rights IMHO, will create a largely counterproductive witch hunt against token sale promoters that will push them further underground where they're less accountable, and will prevent innovation that will produce orders of magnitude more value than the value lost on poor token investments.
I think we defining it in the same way. It's just that I don't believe that 90%+ of ICO's I've seen are "poorly planned" projects. I believe they're cases of asking people for money with no intention whatsoever to deliver anything in exchange.
But yeah, come to think of it, you're right that outright ban is a stupid idea. A better one would be to tighten up regulatory scrutiny a little bit, putting just enough barriers to discourage casual scammers. You're right it's worth to have this experiment in the open, and to see what good things can come out of it.
If someone intends to run away with the cryptocurrency, they've already decided to break the law, with or without regulations. So I don't think adding regulations will dissuade them. I think instead of putting up some kind blanket barrier to entry, which ultimately centralizes an industry, a better track would be to put more resources into enforcing basic fraud laws, to deter would be criminals. Criminals have been putting ads to phishing sites mimicking www.myetherwallet.com on Google for two years. Surely these people can be tracked down.
No-one should have to break the law to bootstrap a crypto network with likeminded people. We reserve the freedom to associate.