"but how is letting just about anyone into the game bad?"

Some params are good, some params are bad.

It's not that letting anyone into the game is bad per se, it's that some params are bad and will try to defraud small unsophisticated investors and it is probably easy to do so.

Congress and the SEC presumably would like to gain the advantages of crowdsourcing but also want to protect the small time $10, $50, $100, $1000, $10,000 investor.