> Coinbase due to wilful negligience, incompetence
What did Coinbase do that made people lose money?
> They literally got rich by having people transfer over their savings
How is it different than any stock broker, insurance broker or bank clerk selling risky or expensive investments to people who don't know better?
Crypto products are not regulated.
Crypto products are new, sophisticated and poorly understood by the average people and can hence be manipulated easily.
That's the main difference between traditional financial products and crypto.
Stock options are regulated and less new, but they are also sophisticated, poorly understood by the average people, and manipulated easily.
The idea that traditional financial markets are 'fair' to the common man is pretty naive: many brokerages intentionally front run their customers or charge unconscionable fees, and the market is rife with non-fiduciary investment advisors who sell products based on what provides the largest kickback rather than what's in the best interest of their customer.
Equating traditional financial system to crypto using front running, high fees etc., is false equivalency.
Society also offers us the freedom to choose how we invest. That means taking a risk and I think Coinbase always made it clear that the area was very risky.
An easy one: Facilitate access to the cryptocurrency scams of the century, mainly shitcoins.
For example, in my Fidelity account I can, if I am so inclined, day trade GBTC, buy low volume penny stocks of sketchy miners and do a lot of other things that are not recommended by the mainstream financial analysts.
There is simply no underlying value within any of these coins. Why would a sane person invest in them?
With regular stocks, you have at least some sort of insight on how an underlying is performing.
I remember hearing the same arguments against Ebay and other e-commerce companies: this is all vaporware, there is no physical value (meaning bricks and mortar storefronts), we should prohibit people from investing in all of those, etc.
I personally would not touch most cryptos with a 6' pole, but that is just my opinion. We should still allow someone who believes in this space to invest their own money the way they see fit. My 2c.
Even if you don't care at all about individuals getting fleeced by scammers, there's a societal reason. We need investment capital for growth, and we need it to be reasonably sanely allocated. If some people raising capital can lie and others have to tell the truth, that puts truth-tellers at a structural disadvantage, meaning more money for fraud, less money for good investments, and a strong incentive for everybody to lie in equal amounts just to keep up.
Worse, over the long term, markets with high levels of scamming mean that most people learn to stay out of them entirely. This leads to even less capital for good investments plus society-wide misallocation of capital. E.g., people just keeping money in their mattresses. So long-term economic growth is harmed for a generation or two. Because even if you clean up a market so it is safe, it takes a long while for people to forget previous pain.
So as a society, we want what America had for decades: strongly regulated financial markets so that the average joe has a variety of safe investment options. For the few who really want to invest in the risky stuff, they can go out and get a Series 65 exam to prove they know what they're doing. [1]
[1] Process described here: https://www.natecation.com/accredited-investor-investing-sta...
In any case, in the US it's still illegal for most investments to take money from non-accredited investors. So yes, this includes your money.
> Even if you don't care at all about individuals getting fleeced by scammers, there's a societal reason. We need investment capital for growth, and we need it to be reasonably sanely allocated
Anytime people start talking about what is acceptably sane and what is not and start restricting investments based on this characterization we create self-reinforcing, traditionalist setups that suffocate everything else.
I agree with this. However I wonder if this is driven by the setup of the 30+ years ago, when US was effectively the only game in town for quick financing of the innovation (accidentally, when it was a lot less regulated). Such setups, if they work well, can keep going for decades before a slow erosion makes them fail.
I think the litmus test will be the way the US handles upcoming economic challenges. Will it be able to keep innovating or will we just keep throwing money at what worked in the past and do not better than average (which, I suspect, will not be good at all). We will see.