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20 sats \ 3 replies \ @nerd2ninja OP 13 Jul 2022 \ parent \ on: If You Aren't Trying to be Money, Why Do You Need a Coin? bitcoin
Okay, but what that still sounds like is scammers gonna scam. Their trying to start equity funds. They're trying to make stocks in a business. Well, if you buy stocks in a business that's regulated, you get protections
https://www.investor.gov/introduction-investing/investing-basics/role-sec/laws-govern-securities-industry
These tokens can not guarantee these kinds of protections, nor are the communities around them demanding these protections before buying the shares. In other words, there is no protections from scams and rug pulls and there is a dismissive disposition to founders having full control over the protocols.
Indeed.
Personally, I'd like to see regulators allow unregulated equity tokens[0] to exist. I think it would do more good than harm in the long term. I believe it should be an investor's individual decision whether or not to invest in an unregulated token. Of course, such tokens should not be advertised as regulated securities.
Many of the problems you mentioned do not require regulations but the enforcement of existing laws, such as fraud law.
This would also probably help slow down the explosion of fake money tokens with no actual economic value.
But I'm not holding my breath...
[0] Either as colored coins on Bitcoin or ERC20 tokens on Ethereum.
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But according to the law, they can't allow unregulated equity to exist. In that link, it describes the
"Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010" which includes things like
"Regulations of Swap Markets" these are credit swaps,
it has the "Investor advisory comittee" which is a continuation of the "Investor Protection and Securities Reform Act of 2010" requires broker dealers of securities (what you and I know as exchanges) be registered with the SEC.
The real nail in the coffee for why regulators can not legally allow unregulated equity tokens is:
"The Securities Act of 1933"
Which requires "that companies disclose important financial information through the registration of securities." and
"that investors receive financial and other significant information concerning securities being offered for public sale"
So in saying that current laws should be enforced...well they are being enforced.
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Yes, I know. What I meant is I wish they would change the regulations to allow unregulated security tokens but have law enforcement more consistently go after scammers through "regular" laws (e.g. fraud law).
For example, the software market is largely unregulated. But if someone sets up a website and starts collecting payments for a non-existing software, they are committing fraud and should be prosecuted. I believe it should be similar with security tokens.
If you intentionally make false or deceitful claims about your business or run away with investment money, you are committing fraud and should be prosecuted.
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