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Comment by e9 | Hacker News Reader

I think unregulated in this case means crypto market in general is prone to pump and dump schemes and other market manipulation without legal repercussions

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It's more interesting to me why we have a seemingly obvious belief that pump and dump schemes (which are effectively a sort of coordinated social phenomenon rather than a material movement) should be regulated. Begs the question: what is the "point" of the financial system, considered as a kind of bounded game, and why is that interesting to the state as an institution?

I'm no political philosopher, but I'd say, for example, the Preamble of the U.S. Constitution says the government's purpose is to “promote the general welfare." Phenomena like bank runs harm the general welfare, so the government has an interest in preventing or mitigating them.

I agree that bank runs harm the general welfare, and the reason why we can make that claim is because of the material relationship between the banks and the general population, as individuals participating in the economic system in order to ensure their own welfare.

But if we look at other sorts of more complex financial instruments, the sort of thing that's inaccessible to an average citizen, then why are they protected by the state as well? The obvious answer would be "well, banks invest in complex financial instruments, and the state wants banks to be protected". But regulating financial instruments isn't necessarily the only way of ensuring that the banks' service to their customers remains stable, it's just one possible path.

To play fair we need some rules to the game. You can’t punch in a face during the basketball game and once someone starts doing it all the time then most would stop playing at that point and go play another game.

Crypto has rules too, does it not? They're just algorithmic, which some believe is far worse, but others believe is best.

Yes there are some rules. But for the majority of people if someone takes advantage of you, with algorithm or socially, then there is no way to punish them. You have to be careful. You can solve this by educating people to be cognizant of risks but who will do that? Where is the incentive? If you are big enough in any game the rules are different. Think of Etherium DAO when it got hacked they decided not to play in the original network and fork it and play a different game.

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