How is this protecting me?
https://quoteinvestigator.com/2011/07/09/poker-patsy/
If you can't figure out what scam a regulation is intended to stop, you're going to fall for that scam.
If you can't tell who the regulations are there to protect, they're there to protect you.
FWIW, I also invest in an S&P 500 index, so I'm not totally anti traditional finance.
But to argue that the purpose behind the SEC et. al. is to ensure "the elite can stay in power" or that "common folks are restricted" is just ridiculous tinfoil hattery, sorry.
Outrageous scams in crypto are a real and significant threat. Everyone can see that. That they aren't traditional finance is quite clearly because of the regulatory regimes that control them.
I agree with this. I think education and prosecuting scam projects are both good.
Although I suppose one could also argue that to catch bad actors ahead of time, there needs to be a way for new cryptos to file with the SEC, to then be audited to see if they are legit. However, I just don't see the SEC being capable of that, at least not yet. Crypto technology is moving too fast for them to keep up. We also still don't have clarity on some basic questions like if Bitcoin or Ethereum are securities or not. Former members of the SEC have alluded that they are not [1], but there are no clear statements on this yet from the SEC. Maybe there need to be more legal precedents set, like from the Ripple case currently going on [2], in order more clarity to be provided and for the path forward to become more clear.
[1] https://www.cnbc.com/2018/06/14/bitcoin-and-ethereum-are-not...
> But to argue that the purpose behind the SEC et. al. is to ensure "the elite can stay in power" or that "common folks are restricted" is just ridiculous tinfoil hattery, sorry.
Thanks for this. Your argument is really simple (in a positive, elegant way) that it functions as a framework to rebuke most conspiracy theories people spew out nowadays. I've just never been able to present it so cleanly.
That isn't some great scheme to keep the common man down. It's to protect the average consumers from the kinds of crypto scams that are advertised daily, even on little cardboard signs around my own neighborhood.
The assumption that they are a bit more savvy is exactly what I'm talking about.
Most of the crypto scams are not novel. The almost two century-old "Extraordinary popular delusions and the madness of crowds" (1841) has the classics from the first time around, when newspapers first got going. (Newspapers made possible scams at scale. There has to be some way to reach large numbers of suckers.)
There are two main scam formats. One is "We're going to take your money and do this profitable thing and you're all going to get rich". That's a classic blue-sky investment scam. Some of those succeed. Most fail. In the crypto world, the "doing the profitable thing" part is often skipped or deferred. (Right now, the "we're going to build a metaverse Real Soon Now so buy our NFT now" thing is big.)
Then there's the "Loan us your money and get a regular high payback, but we're vague about where the money goes". That's a Ponzi scheme. Those always fail. (That's Axie Infinity and their Smooth Love Potion token. And, of course, Madoff.)
Go read up on the history of securities trading prior to the various acts from the 1930s.
Without regulatory bodies, markets would not exist.
This is because regular consumers don't have the energy or ability to evaluate the quality of products or services, so in certain areas (health, safety, finance), where it 'really matters' - we regulate.
Without a drug regulatory body, there would be no way to know what drugs work, and the market would be almost entirely scammers.
Have a look at 'moisterizers' - it's a ridiculous game of false and misleading information by so called 'reputable' companies using technology totally out of context i.e. 'collagen' in order to be able to put it on the label. There's nary a way to understand what is effective and what is not. It's a completely distorted market. Now, it's just moisturizer, so it doesn't matter.
But we don't want the same thing for diabetes drugs, now do we?
The financial system is highly, highly regulated because it used to be full of outright scams and the system couldn't grow without it.
Integrity is key to all long term growth, it's why we have rules.
Now it should be possible to invest in highly speculative, risky things - sure - that should be up to you - but the reason we don't want to allow that in some instances is because the mechanism itself is fraudulent and misrepresentation i.e. a Ponzi Scheme is a Ponzi Scheme and it's bad to have them going around, even if you want to invest in them.
The entire field of Crypto thus far has been a giant distraction and waste of time, while there is definitely the possibility of some good coming out of this, it hasn't happened yet, we should be in the experimental stage, not the 'using up more electricity than Argentina stage'.
> Now it should be possible to invest in highly speculative, risky things - sure - that should be up to you
This is literally all I'm asking.
You're asking to defraud people.
(i.e. invest in things that are securities, but without having to follow the securities regulations).
Sorry, but no.
This is not a matter of just 'risk' to you - you are allowed to take on as much risk as you want - you may need to be an accredited investor, sure, but you can still take on risk and invest in whatever you want.
As long as it's not a scam.
'We' (i.e. everyone else) does not want 'you' putting money in giant scam vehicles, they're toxic to a functioning market.
If you want to sell/buy/participate in a market for something that is like a security, then it has to follow securities regulations.
If you want to sell a drug that says that 'it cures cancer' - it has to be approved.
If you want to sell a car, it has to pass safety checks.
If you don't want to do those things, then you can go a place like Afghanistan to see how it works out. FYI even the Taliban (!) are trying to fight against fraud because they know it's bad.
There is no advantage to to society to skip these regulations. The only advantage to cheating on the regulations, is for early movers, to leverage themselves over dupes in an otherwise zero-sum game.
There are opportunities for things that transcend regulation but we don't have any examples of that quite yet.
For example, 'some future crypto' (not BTC or ETH) might provide the possibility for less oversight etc..
How is this not a contradictory statement? Are you claiming that anybody can become an accredited investor? That's incorrect, you need to be pretty damn close to the 1% to qualify.
https://www.investopedia.com/terms/a/accreditedinvestor.asp
2018 Annual Wages
Group Wages
Top 0.1% of Earners - $2,808,104
Top 1% of Earners - $737,697
Top 5% of Earners - $309,348
Top 10% of Earners - $158,002
(formatting changed to work on HN) from https://www.investopedia.com/personal-finance/how-much-incom...
I'm asking for people to have choice.
> This is not a matter of just 'risk' to you - you are allowed to take on as much risk as you want - you may need to be an accredited investor, sure, but you can still take on risk and invest in whatever you want.
This is not true. As an accredited investor in the US, I cannot invest in any crypto that I want to due to domestic restrictions.
FWIW, I'm not against regulation, I just find it funny that we think laws from 1933 are applicable to any technology released in the future. That seems completely absurd to me. I think crypto should have its own set of regulations. I'm not against the SEC going after specific scams, I think they should do that, but I think people should have choice of what they invest in.
> I'm asking for people to have choice.
...which is exactly what opens the door to people being defrauded.
Can you explain how this is different to requiring approval for new drugs or medical devices?
Fwiw, if you are arguing for a review of how existing laws should apply to crypto, I'm fully on board. But that's not what Coinbase is trying to do at all. They are trying everything in their might to circumvent all of it.
Yes, I think we are on the same page. I don't think crypto should be, or it is even possible to be, the wild west, indefinitely. Something should be in place, but we should have some clarity, and it would be great if the organization coming up with the laws understands the technology at a technical level. Gary Gensler seems promising, but time will tell.
Until then, bona fide intentions to "evolve" regulation are virtually impossible to tell apart from fraudulent intentions and most of us can't be bothered to spend the time or effort to engage in such a fruitless exercise.
FWIW, I'm not saying Coinbase is right here, and I'm not saying deregulate it all. I do think regulatory clarity in crypto would be good, and possibly we should revise some laws that were made almost a century ago.
I do not have an actual proposal but I am not a law maker.