It ultimately comes down to what flavour of politics you subscribe to. The key question is whether you think that the public should be protected against the abuses of the free market, or if the free market should be a complete free-for-all. For example, Dodd-Frank solved a concrete problem, and there have been countless studies that show it it responsible for stabilizing the US economy.

But ultimately, wanting to die on the ICO hill is a bit odd. I thought it was fairly clear (at least, it was fairly clear to me) that the whole "industry" is mostly powered by hype -- which leads to people being swindled out of their money. Wanting to protect a completely unregulated industry's ability to fool people into wasting their money doesn't seem like a sane or sustainable position (that's how economic crashes happen).

> Keeping me out of Uber's seed round is a violation of my rights.

First of all, this is a story about China. Second of all, it's a story about ICOs and not non-ICO startups. Third of all, is it also a violation of your rights to not be able to fund companies in countries that are at war with your country (which I assume is the US)? Is it a violation of your rights to not be able to fund illegal activity? I'm just trying to gauge at which point does your view on "the inalienable right to invest in anything" stop short? I would expect that China is trying to come to a decision about whether ICOs should be made illegal or more regulated.

Those "studies" are self serving. That is the political propaganda keeping you feeling safe in having your rights violated. This isn't a question of flavor of politics- but fundamental rights. Do you have freedom of association or not?

Secondly, you think its "fairly clear to [you]" that these ICOs are scams. I am sure some are, but I know for a fact that many are not. I am quite capable of telling the difference (as a blockchain engineer.)

The presumption that every startup failing is "people being swindled out of their money" is very odd one for a discussion forum run by y-combinator.

Is y-combinator being swindled when an investment fails?

And you're still sidestepping the point:

It's my right to apply my own discernment to what are good and what are bad investments. Not people who don't know the difference between SHA1 and SHA2.

> Those "studies" are self serving. That is the political propaganda keeping you feeling safe in having your rights violated.

Ah, so you're the only source of truth that I can trust in this discussion, since no study can be trusted? Awesome.

Can you answer my question about at which point do you think "freedom to invest in an enterprise" should not be allowed? I'll quote my question again:

> Third of all, is it also a violation of your rights to not be able to fund companies in countries that are at war with your country (which I assume is the US)? Is it a violation of your rights to not be able to fund illegal activity? I'm just trying to gauge at which point does your view on "the inalienable right to invest in anything" stop short?

One of your key premises, that investing in startups is a key / good path to getting rich, is flawed. Investing in startups is notoriously NOT that stable of an investment vehicle. If you're a small-scale enough investor to not meet accreditation rules, why would you WANT to throw 10k at a startup?

You speak in terms of rights and that's one debate to have. But evaluating the material harm in this situation, the notion that this denies upward economic mobility in a significant way seems overstated.

"One of your key premises, that investing in startups is a key / good path to getting rich, is flawed" - straw man argument

His key premise is that freedom of association extends to seed investments. As the other poster said you have set up a straw man argument here.

> Secondly, you think its "fairly clear to [you]" that these ICOs are scams. I am sure some are, but I know for a fact that many are not. I am quite capable of telling the difference (as a blockchain engineer.)

The average Joe and Jane on Instagram/Twitter/FB can simply not tell if it's a scam or not what e.g. Paris Hilton is advertising.

Heck, I'm a sw dev too - and I have a hard time figuring out why some of the ICOs need their own token at all. Simple offer what you sell (e.g. legal services for a certain market) directly and let them pay as they wish. Absolutely no need for a blockchain to achieve things.

Exactly. Being a blockchain engineer may allow you to judge their code. But the business behind it is a different matter altogether.

Where do your "fundamental rights" come from? Brought down on stone tablets? I mean, I like individual freedoms as much as the next person, but you can't just slap "fundamental" in front of something and then declare the debate over. The other side can just reply that societies have a fundamental right to protect themselves from societal harms at the expense of individuals.

People disagree about what rights people have and what rights governments have. Simply prefixing the word rights with a phrase like "innate," "fundamental," or "inalienable" to make it seem beyond debate is just sophistry.

> It's my right to apply my own discernment to what are good and what are bad investments.

Let's say, hypothetically, that someone is not as good as you at stock picking, and they make extremely bad investment choices, added and abetted by an army of "wolves of wall street" all selling penny stocks that "are guaranteed to go big".

Once they arrive at their 0% ROI at retirement stage, don't they rely then on a government-provided safety net for various survival needs? Shouldn't the government then have a say, or at least some interest, in decreasing the probability of such extremely bad choices?

lol a radical libertarian I see you are. You have every right to trust your own ideas, right, but calling every "studies" as self-serving is a bit too far. I'd say the right-wing studies and arguments for a completely free market are just as likely, if not more likely, to be totally self-serving and lacking in objective truths.

Time will tell whether the system is more or less robust with Dodd Frank. Also the previous system seemed robust until the crash happened. An argument could be made that more legislation and onerous regulation pushes smaller actors out of the game. Then you end up with a bunch of too-big-to-fail corporations that take the whole system down if they fail. Regulatory capture is also a major issue with too big entities.

Reading tip: Antifragile by Nassim Nicholas Taleb

It isn't the public, it's the public not in the 1%.

> It ultimately comes down to what flavour of politics you subscribe to

If you were to tell any of your progressive friends about Reg-D, but framed it as written by "the 1%" - they'll naturally think the law is unjust and shouldn't exist.

I think this has less to do with political flavor and more to do with critical thinking skills. Unless Reg-D also bans gambling at Vegas and throwing your money down a well - then it comes up short of it's protectionist goals. But it definitely succeeds in protecting qualified investors from "unqualified" investors.

> If you were to tell any of your progressive friends about Reg-D, but framed it as written by "the 1%" - they'll naturally think the law is unjust and shouldn't exist.

I agree that there is a lot of collectivism in politics, and that "the 1%" rallying cries are mostly a way of controlling a group of people into opposing things they are uninformed about. So discussing anything as being written by "the 1%" is never going to lead to useful discourse. But I don't see why any of that matters.

Also "any of [my] progressive friends"? I don't understand why you're being hostile. I don't really associate with people based on their politics, it makes it too easy to have an echo chamber (or a shouting match). Not to mention that wasn't the point of my comment, it was to ask GGP to expand on their views.

> I think this has less to do with political flavor and more to do with critical thinking skills.

Then why mention (what you assume are) my politics at all?

> Unless Reg-D also bans gambling at Vegas and throwing your money down a well - then it comes up short of it's protectionist goals.

I think gambling should be better regulated, and I think that defrauding people to "throw money down a well" shouldn't be legal. I don't care if you, of your own volition, decide to throw your money down a well (though it actually does cost your country money to re-print said currency). What I do care about is someone trying to defraud you. But this is a complete straw-man, securities laws are about fraud not about being stupid with your money.

I'm not authoritarian, but pretending like regulation over speculative investments are not going to help any unexperienced investors is just ridiculous.

I think the issue with these regulations is that they use net worth as a proxy for an investor's qualifications. I'm not convinced that this is a good proxy.

Any grandma or grandpa who's been putting a decent amount from each paycheck into US equities for 50 years is going to be very wealthy today - but is probably not truly a "sophisticated investor". They're a prime target to get ripped off.

By contrast, a bright young software engineer a few years ago who picked up early on Airbnb or Uber could potentially be a "sophisticated investor", but would be excluded because of his or her net worth.

I really am not sure what an ideal proxy would be. I used "grandma/grandpa" and "bright young software engineer" in my example, but I don't think age or occupation would be good proxies either. Perhaps some sort of investor qualification exam?

Regardless, the completely-unregulated ICO market is a separate issue from private equity more generally. We should be careful conflating the two.

Although I read what you wrote and to a large extent agree, I have to say, love the name: RothbardRand (Murry Rothbard was a major figure in Austrian School of economics and modern libertarianism. Ayn Rand a philosopher, and developer of the philosophical framework of Objectivism)

Makes sense why you feel this way.

What I will say, is no one stopped you from investing in Uber, besides Uber. Tomorrow I can go out and sell half my C-Corp to a friend. Legally, no one is stopping me, besides me and my contract(s). My company isn't publically traded, and as such, I haven't released shares to be bought and sold.

That being said, if you're talking about "accredition" - that shouldn't stop you from being able to invest in a friend's or aquantences company. At least until you have 35 of said people..

Which I agree is B.S., at the same time - it's just a way to ensure you don't get massive companies like Uber getting billions of funding and providing no services. It's an attempt at curbing a dot-com-esqu bubble. Overall, I do think this is government over reach, but I do see the point.

There are ways around that FYI, for example there isn't a reason a financial advisor couldn't invest on your behalf.

If Uber had made shares available to unaccredited investors, they would have gotten in trouble. I'm quite certain that the grandparent was not in the list of Travis's top 35 people to raise $10k from, and as such he had no legal opportunity to buy shares, even if Uber had wanted to sell them.

The problem is that companies doing ICOs aren't Uber.

Peek your head into /r/ethtrader. You will find people putting their retirement savings, mortgaging houses, etc and these people aren't technically savvy and can be easily taken for a ride. While you might have good apples, there are going to be tons of bad apples, people just coming with a white paper and asking for millions of dollars. Coming back to your question, the rich don't need protection as its ok to lose money when you are rich. The 'not rich' need protection as if they lose all their savings, it will seriously harm their lives.

That's your presumption. You think they aren't technically savvy. Hell, I think some of them aren't myself, but it's not my right, and it's not your right, to say what they can or cannot do with their property.

And a lot of those non-"savvy" people have outperformed me, for instance by buying ETH at the ICO.

You guys keep presuming that the only choice is "people losing all their money" and that these regulations stop that.

The reality is, these regulations keep the poor people poor, not keep them from losing all their money.

As I have pointed out, you can go to Las Vegas and lose all your savings in a weekend.

That dog don't hunt.

It boils down if you are willing to accept that stupid people are going to pay for their stupidity (on very real and life-altering consequences) or if they should be shielded from it.

Personally I belong to the side where I'm willing to give up some personal freedoms for a better collective life, that includes saving very stupid people from very stupid decisions that might affect the rest of their lives (and their families').

His point is that the government not only doesn't ban many forms of stupid decisions, but actively encourages ones that provide significant revenue, particularly in the gambling and consumer spending spheres.

"Tu quoque" is actually a pretty useful heuristic for analyzing whether a party's stated goals for a policy align with its actual ones.

Regulation is only on the surface about investor protection. The main driver is usually taxation (only what's regulated can be taxed). If these investment schemes become too liquid allowing anyone to invest in anything in large sums, tax evasion and tax fraud become even harder for authorities to track (especially since there's no legal framework for ICOs - and creating those takes time). As many others have pointed out, there's no legislation that will hold you back investing in the companies behind these ICOs in one way or another. Just talk to the founders, ask them to sell you some shares and you're good to go. But then there's a well established track record when you buy and transfer shares (for example in the books of the company that sold you the shares). The same is not (yet) true for ICOs.

This is an excellent argument that the crime of fraud does not exist.

you assume that 1) most people are rational and 2) irrational behaviors of others costs you and everyone else nothing (in dollars or utility).

Maybe I'm cold-hearted but I believe in something called "personal responsibility." They chose to throw their money into something they don't understand, now they get the consequences of that decision. You can be sure they'd be all about accepting the consequences of their decision if it panned out the other way and they made a fortune. I feel zero sympathy.

you too can be in one of those situations. Humans aren't at their rational best all the times.

The law you're referring to is more about marketing investments.

You're still free to give your friend 10k for a startup.

It's to prevent boiler room style organizations that quite effectively convince people without much information that an investment is sound when it's not.

    You're still free to give your friend 10k for a startup.

Uh? As a gift but not an investment on his company, that's illegal if you're not accredited.

This is incorrect. Some unaccredited investments are allowed, and above certain thresholds it just triggers onerous reporting requirements. It is not illegal to make unaccredited investments. It is illegal to market/promote to unaccredited investors however.

What? I can't take 10K from my parents/friends and give them equity?

It's highly limited. If you have 300 friends you can't take $10k from each, unless they are accredited.

This is why syndicates exist. Not a problem at all. Edit: not the only reason why they exist :) but a major one. To explain a bit more: syndicates allow you to consolidate multiple investors (not necessarily acredited) in an investment vehicle that then owns a chunk of stock in the company.

Don't quote me on this, but there's a specific-ish exemption for family/friends if I recall correctly.

there are specific exemptions for family, for friends and for fools ;)

Remember when you could do kickstarters with simulated renders of your product and everyone got scammed constantly?

It's because of that

Never happened. Some kick starters didn't deliver, but you're factually wrong-- these laws have existed for decades before Kickstarter started-- and you ignore my point. You can lose your life savings in a weekend in Las Vegas and nobody bats an eye.

It certainly did happen, there was a spate of kickstarter projects that turned out to be vapourware. The rules were changed after a while.

There are regulations for casinos as well.

The US recently started allowing startups to raise money from non-accredited investors. It's just that most legitimate startups still prefer raising from legitimate investors.

This has left "startups" like this "company" YayYo, which raise money from TV commercials stating that they'll become the next Uber.

http://www.businessinsider.com/yayyo-ipo-ads-tv-ramy-el-batr...

1) In the alternate reality where you did invest in AirBnb and Uber, how did you manage to concentrate your investments in those two companies, and reject thousands of contenders who eventually folded down? If you also invested in 10,000 photo-sharing apps and "Yo" clones, what are the total portfolio returns?

2) In that alternate reality, what advantage did your money have over YC, Andreessen Horowitz or Benchmark money? Were you able to connect founders to top government decision makers, or bulk up their growing management team with hard-to-get candidates? If the answer is "yes", you could've been awarded advisory shares in Uber and AirBnb without being a qualified investor (a gift is a gift, after all). But since more likely the answer is "no, my money is no different than money from a joe schmoe down the street", you will likely be required to overpay for a ridiculous valuation at seed stage. What effect would that have on your portfolio as a whole?

We tried libertarianism. It doesn't work. I realize the futility of trying to explain this to someone with the username "rothbardrand" but I used to be a libertarian and I finally broke out of it, so maybe this will give someone else teetering on the edge some things to think about.

1. Libertarianism sweeps negative externalities under the rug. Air quality, noise pollution, the costs to society when an elderly person goes bankrupt. The counter arguments are thin. If you don't ban building in a flood plain, people will build in the flood plain. Then the flood will happen and we'll all be worse off.

2. Libertarianism is inefficient because it demands that people become experts in a wide, wide array of topics in order to be healthy and financially secure. Sometimes becoming an expert in a topic is to experience it. For example, I used to be addicted to nicotine. It's one thing to explain with words how addictive it is, it's another to actually be addicted. By introducing a bit of a nanny state we can use laws and taxes as a kind of cross generational memory and save people from having to learn some of the lessons we had to learn.

3. Libertarianism doesn't address the concept of power. It pits the whole world through the lens of rights when there are other concerns like foreign citizens owning portions of companies critical to our national security or owning large portions of our media.

4. Libertarianism underestimates how much work the state puts towards fighting international crime. We use the financial system to track where mafias hide money and how they organize their money laundering schemes.

The problem with leaving libertarianism is that after years of thinking about everything through the lens of rights and the individual one is left with the question "well, what matters then?" and the answer is difficult, but here is my best shot:

The world is one of consequence. So when think about policies we should be concerned with our ends, but we should choose our ends as if we didn't know who we were in the world beforehand.

So my answer is roughly "consequentialism tempered by individual / human rights".

You don't get to buy into Uber's round because they aren't a public company. If they become a public company they have to open their books. Why? Because widespread fraud happened before this and it wasn't just to little old grandma. Sorry about the violation of your rights, but if I didn't know who I would be beforehand, this is what I think would lead to the best average outcome.

As for the middle class not being able to invest in the best companies, I agree with you that we should change some of our regulations. I agree that the rich are getting richer because not enough companies are going public. Let's fix the regulations that empower investment banks at the expense of the entrepreneurs and potential investors, and while we're at it let's raise taxes on the super rich and close their loopholes.

But at the same time let's acknowledge something else: The middle class and the poor have it best in countries like Sweden or Switzerland or Canada where we have more government not less. Where we have more international cooperation not less. Where we have more "collectivism", more education, more consumer protections, more environmental regulation, more investment into research.

And yes we also have rights too, but they're not these absolute mathematical truths and it doesn't mean we should let a bunch of people skirt fiscal regulation by raising a bunch of money anonymously with ICOs.

It's interesting that you give Switzerland as an example since many would regard it as the most libertarian country today. Could you imagine this [2] happening in the US?

Public spending to GDP ratio [1]:

  Sweden      51
  US          42
  Canada      42
  Switzerland 34

When the Swedish welfare state has collapsed (I'm Swedish, and it's not looking good) you are welcome back to the small government camp :).

No 1 is a good argument against libertarianism. A counter-argument is that more libertarian-style decentralized decision-making would mitigate negative externalities and the "common good tragedy". Research suggests [3] that negative externalities can be managed in smaller communities; smaller government also makes it harder for parasitic organisations to suck out money. Pollution can also be taken care of in the court system rather than regulation.

Before advancing an "how would X work?" argument, you should consider whether X really works better in other systems. Last time I checked, there was a ton of flooded houses in Houston, plenty of people smoke, and there is quite a bit of organized crime (a popular one in Sweden is "assistance compensation" paid out by the government to people who take care of sick relatives at home. Who would ever think about abusing it?? Surely not the mafia and IS). No-one is claiming that liberty will produce a perfect world, but that it's the morally right thing. As a bonus it would also likely produce better outcomes (on average) than what we have today.

[1]: https://en.wikipedia.org/wiki/Government_spending#As_a_perce...

[2]: https://www.theguardian.com/world/2017/jul/18/switzerland-pu...

[3]: https://en.wikipedia.org/wiki/Elinor_Ostrom

The US isn't a libertarian country, and neither is Switzerland, and public spending to GDP doesn't mean anything within the context of what I was saying because it doesn't take into account what the funds were spent on.

The US overspends on its military and mismanages its spending on healthcare. If Sweden's welfare / education / state has collapsed since I lasted checked it out, I'll update my views, but I certainly haven't seen rising illiteracy or poverty like we see in the US.

I don't understand why you're talking about Uber and regulations, when this is China we're talking about. You seem to be on a completely different subject, because the article says nothing about law, and says its a decision by China's Central Bank.

"Ultimately this stuff keeps grandmas poor."

Again, completely off topic to the post. But, when you talk about 'regulations', you should be making yourself clear, because you're covering massive territory and calling it all 'bad' with that statement, which is certainly not true.

Name one ICO that is a legitimate business.

most ICOs are done by startups that haven't built their businesses yet - that's why they are raising money. Many of them seem like legitimate businesses that could fail but also could succeed.

So you can't name a single legitimate business that's doing an ico?

filecoin. storj. factom, ripple, omega one. golem, iconomi there are tons of them.

Filecoin? Consider Bit Torrent seeding/bandwidth. It is too cheap to count for at least 10 years. Even tit-for-tat is no longer necessary since LEDBAT was rolled out (circa 2010).

The stuff they are going to count "on the blockchain" is too cheap to count! Well, and blockchain transactions are kind of expensive and slow. See the problem?

the question was to name legitimate businesses doing ICOs. filecoin is certainly legitimate. You are talking about how their tech might fail and how their business might not work. that's great, and you could very well be correct, but that's not what we are discussing here

I am rather certain that guys consumed less-legal substances while drafting their whitepapers. That is my top reason not to consider their business "legitimate".

You didn't make a point, sorry.

ok, to those who didn't get my point. Everyone is certainly entitled to make up their own definition of "legitimate". However, as long as we are all speaking English, we can agree on what legitimate means. And it means the following:

le·git·i·mate adjective adjective: legitimate ləˈjidəmət/ 1. conforming to the law or to rules. "his claims to legitimate authority"

so, it's great to have a learned opinion on filecoin's tech, but its irrelevant to the discussion of whether filecoin is a legitimate business

Those companies have products available that consumers pay real money for?

Some of them do, like factom. others are raising money through the ICO to build those products. Is that a bad thing ?

Most seed rounds are not Uber.

What about Quirky, Homejoy, Zirtual, Secret, Grooveshark, Rdio, Leap, Theranos, Sprig, Beepi, ...

It ... sounds like you wouldn't have any trouble getting accredited?

Very good point.

It sounds like "Why are there laws that prevent fools from giving their money to me?"

The more replies I read, the more I'm convinced these regulations are working exactly as intended: to protect the innocent from free-for-all sociopaths.

Why does it sound like that to you? I've seen no evidence that the majority in this thread arguing against the ban have revealed that scamming people out of their money is their ultimate motivation. Assuming bad faith based on cartoonish ideological stereotypes is not fair.

It's not about money, it's about the freedom to associate with a group that I am aligned with.

What do you think the Chinese government has to gain from these regulations? Protection of the consumer? This is China we're talking about here.

Lets assume I am accredited.

This isn't about me getting mine.

This is about the fact that the regulations deny you a chance to join me.

they do not. crowdfunding from non accredited investors is already allowed.

http://www.investopedia.com/articles/entrepreneurship-small-...

When did you have the opportunity to invest in Uber or AirBnB? I really don't think at any point of time were random accredited investors with 10k able to invest in Uber...

Gambling is also very illegal in china.

The thing is these are a huge haven for money laundering which is probably the best explanation for the amounts raised.

I've sat through numerous courses on money laundering, and under none of the definitons used in any of those courses would transfering money from your savings account to your checking account to pay your visa bill be considered laundering, (unless the money in your savings account was acquired in a criminal way).

Check out the https://www.ffiec.gov/bsa%5Faml%5Finfobase/documents/regulat... Money Laundering Control Act of 1986. Every part of the definition requires the money be the proceeds or involved in a specified illegal activity.

Yes, and the "illegal activity" can be "money laundering"

Can you point to the statute where you get that interpretation from? Preferably with court proceedings that show that a judge has actually decided that that is money laundering. Because I find that statement incredibly hard to believe.

Not to mention that you're completely ignoring GP's point, which is that it seems that money laundering may be occurring in an ICO. Is your claim that people only use ICOs to transfer money from a savings to a checking account to pay their VISA bills? Seems to me like there's a more airtight argument you might be able to come up with, given your self-proclaimed experience in the topic.

I was asking you to provide evidence for this statement:

> Literally, under the legal definition, that's "laundering".

"Legal definitions" are defined through laws and common law interpretations of those laws. I was asking for evidence of either. Otherwise you're just making statements without any evidence. It's not a straw-man to better define your statement of "that's the legal definition" to mean "there has been a court case or statute where it has been shown that's what the law says" and then ask for proof of that. Maybe you can explain what you think a "legal definition" is and provide evidence of that?

"It's a thought crime."

uhm wat?

Knowing about Uber isn't enough, you need access to their seed round which is on a selective basis

In addition to that book you mentioned, check out “Scandal of Money” by George Gilder (quick read) covering the concept of these sort of regulations as well as the nature of sound money vs extreme “financialism” that has replaced it over the last few decades in developed economies... along with increased regulation essentially separating main street from Wall Street / Silicon Valley.

He describes how a return to sound money through Bitcoin and perhaps a new gold standard, as well as reducing these sorts of regulations you describe would enable a renewed prosperity of the middle class.. for a whole host of reasons worth reading in the book.

Did they do this to "protect" people, or for more control?

Almost any ban can be said to be done to protect people.

Cant have them reading some books for their own good!

Nobody care of your rights, if you think you deserve it you have to fight for it. What concrete action have you take to fight it ?

I don't understand. To invest in Uber seed round you had to be an accredited investor. That's a pretty low bar in the US. But now, crowdfunding rules have removed this requirement for those raising less than 5 million.

I need to say that you have some great points ;) It's really exciting to read opinion so close to my heart.

Currently, I work at Neufund where we want to do exactly what you described: open access to broad range of investment opportunities for everyone by using cryptocurrencies. Check it out! https://neufund.org/