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Comment by cslarson | Hacker News Reader

The only way to build wealth is by investing. The SEC gate-keeping this is outrageous.

I'm unsure about this. On the one hand, it does seem unfair to exclude people who aren't rich from particular kinds of investment. On the other, it might be a good protection for the overall system. The investments we're talking about here aren't your everyday shares and funds, they're the riskier stuff. It doesn't play well on TV to show a grandmother crying over the loss of her retirement savings and some smarmy banker saying "well, Ms Strawman clearly accepted the risks that were set out plain as day on page 2915 of Annex A7 to the disclosure bundle". Before you know it, media pressure leads to bad regulations that mean no one is allowed to make these risky investments.

The real problem here is that the constraint is on how much money you have regardless of how much money you're investing.

If your net worth is $20M and you're investing $20,000, losing all of it clearly wouldn't bankrupt you. If your net worth is $20,000 and you're investing $20,000, losing all of it clearly would bankrupt you.

But then you say to the person with $20,000 that they can't invest $500. Which is kind of nonsense.

Absolutely this. Just make a percentage of net worth requirement. It's pretty hard to find a decent investment if you can't join a syndication or invest in much of anything that has not already been through the ringer of the wealthy a few times, and played out.

The SEC is not trying to gate-keep wealth building, they're trying to protect consumers from fraudsters that feast on average consumers.

People act like all of these companies trying to cash in on the crypto gold rush are on the up and up, but historically when there's a gold rush, there are unscrupulous actors seeking to cheat and steal from unsuspecting marks.

We can throw up our hands and just say 'free market' and 'caveat emptor', but if too much money gets roped into a financial bubble, when it bursts it hurts everybody.

So right now there are crypto firms making all kinds of claims about how their assets are backed, or how consumer money is safe in their little DeFi account. It is, and should be in the SEC's (and the NYAG's) purview to regulate that.

It's sad that you seem to have such contempt for DeFi. Yes there is a gold rush and yes there are scammers but scammers have become less common over time. I haven't heard of a major scam in awhile.

The crypto market is maturing and it's a shame that people like you seem to want to cut it off before it fully matures.

It's not about contempt for defi, it's about applying the same level of regulatory oversight to defi that any other lending institution would have.

Truth of the matter is that in the financial industry there are always cutthroat and dishonest players trying to find a novel way to bilk people and yet more people trying to make a buck in a reckless manner that endangers consumer money.

Ultimately it's not about crippling the crypto industry, it's about preventing fraud irresponsibility. Other financial sectors have to do this, crypto should be no different.

I strongly disagree. When regulation is absent we can rely on trust. Not blind trust, but trust built over time. You can see this in action in other unregulated spaces such as trading card (pokemon, magic, baseball) markets.

These markets are prone to scams and counterfeit. In response, various appraisal services rose up (like Beckett) that promise to verify the authenticity of these cards. They've managed to build community trust over time and are now a staple of the industry.

The same thing will happen with DeFi, it just needs room to grow and mature. I think your opinion will change once heavyweights like Visa join the club (see below).

https://www.coindesk.com/business/2021/09/30/visa-unveils-pr...

It's sad you're getting downvoted. Right now our system is setup such that the rich and powerful get special privileges that the rest of us don't.

They also abuse these privileges all the time.

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