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I think crypto fans want transparency and an equal playing field, and are more afraid of things like regulatory corruption and markets that are not open to them

I think crypto fans want transparency and an equal playing field, and are more afraid of things like regulatory corruption and markets that are not open to them. It is not clear that "regulated finance" prevents comically unfair outcomes either. You still have insider trading that is legally protected, discriminatory rules like accredited investor qualifications, and abuse of the legal system by the rich to avoid regulations with loopholes or lobbying.

skybrian 4y ago
Um, being an accredited investor gives you exposure to investments that aren’t transparent. You don’t get the same access to financial statements as with public companies. If you want more transparent investments then you should be advocating for reforms that will encourage companies to go public sooner. This would be reversing the trend in recent years where companies stay private longer, which allows them to not disclose how they’re doing.
- datadata 4y ago
  Accredited investor rules was an example of not having a even playing field. The market is not open to everyone which contributes to unfair outcomes. I'd welcome reforms to transparency as well there, as lack of transparency also contributes to unfair outcomes (the company can exploit investors).
  - jakelazaroff 4y ago
    The accredited investor rules are in place to protect people who can’t bear the losses from an extremely adversarial financial system. I promise you that even if you get rid of the rules, people with a few thousand dollars to spend still would not have access to the best investments.
    - datadata 4y ago
      I believe that every financial transaction has the potential to be adversarial, there are many ways outside of investing that the poor are disproportionately exploited (lotteries, debt interest). I think the libertarian perspective is that we shouldn't have protections that prevent people from making personal choices that result in harm to themselves, but only from harming others. I think that transparency for the companies seeking investment, or education of the investors themselves are better ways to restrict investment. Net worth/Income is not a fair criteria.
      - kyleplum 4y ago
        > I think the libertarian perspective is that we shouldn't have protections that prevent people from making personal choices that result in harm to themselves, but only from harming others. There are a few ways that someone bankrupting themselves via bad investments does hurt others: Dependents will be significantly harmed They are more likely to end up homeless or in jail on the dime of society They are less likely to be a productive member of society. I suppose the libertarian response would be that if someone bankrupts themselves, let them die homeless on the street - but I don't think you'll get agreement from any significant portion of society on that approach and even then someone has to pay to clean up their body.
  - skybrian 4y ago
    Could you be clearer about what you mean by transparency? Do you think private companies should make their financial statements public? Do they need to be audited?
    - FabHK 4y ago
      One could argue that companies ought to go public sooner, with the concomitant obligations and transparency on one hand, and the investment opportunities for unaccredited investors on the other. Rules with criteria such as revenue, employees, or something could achieve that.
    - datadata 4y ago
      I think trading on the basis of private information at the expense of other shareholders without the same information is the problem. I'm less concerned about the specifics of filing requirements, and more concerned about information asymmetry regardless of auditing/reporting obligations. I'm not sure I know enough to recommend a specific policy here, my original comment was just what I believe to be some of the flaws that 'crypto fans' see in traditional systems.
      - skybrian 4y ago
        Okay, fair enough! However, reporting requirements and auditing are all about making sure everyone has access to the same, accurate information about a company's financial situation. Insiders will learn about changes in a company's finances before outsiders. If they can disclose this to some investors but not others, or even disclose it to some investors first, then that increases information asymmetry. But this doesn't seem to be something that crypto fans are interested in, because they're not really investing in companies?
        datadata 4y ago
        I think if the investment story of companies was better, maybe there would be less demand for crypto in the first place? Another big appeal is that in crypto the rules (governing the crypto itself) are not changeable by humans. This eliminates a large category of manipulation by insiders (while opening the door to other problems).
  - jcranberry 4y ago
    Accredited investing requirements are to keep non-experts or people without money to lose from being swindled by companies which aren't required to be transparent with their financials.
    - TheColorYellow 4y ago
      Public companies swindle quite often, and usually with more catastrophic results. When are we going to admit that the current rules are no longer working?
      - Goronmon 4y ago
        So then you agree that accredited investing requirements aren't the problem?
      - FabHK 4y ago
        So, given that companies swindle with catastrophic results, you're suggesting to have fewer rules and regulations? Less enforcement and oversight?
  - thwayunion 4y ago
    > Accredited investor rules was an example of not having a even playing field. 1. Having an income that qualifies you as an accredited investor doesn't mean that you will have access to higher quality investments. 2. Even if you don't qualify as an accredited investor, you probably still have access to the same set of investments that a capital-poor accredited investor has access to. As an accredited investor, I've never had access to an investment opportunity which I couldn't have also accessed without being an accredited investor. No one checks, and the "opportunities" are mostly not great anyways unless you have a lot of capital and connections. The operative things that unlock unfair investment opportunities are 1. one's professional network (or family), and 2. access to large amounts of capital. You can counter this assertion by providing a list of investments which are open to all accredited investors, do not require significant amounts of capital, and which have higher expected return with lower risk than investments that are available to non-accredited investors. The common misconception that becoming an accredited investor suddenly gives you access to high quality investments with super high returns for low risk is one of the best justifications I've ever seen for keeping the rule in place... which is particularly funny because I'm not even an avid fan of the accredited investor rule.
    - datadata 4y ago
      You are basically saying that accredited investor rules are not successful in excluding people from making certain types of more desirable investments, because there are other barriers that are in place anyway. I think this is true, but beside the point. If you want to have an even playing field for investing, every barrier is an obstacle.
      - thwayunion 4y ago
        > I think this is true, but beside the point. I think you missed my point. To reiterate: the fact that people believe that it's not true is, ironically, a convincing justification for the accredited investor rule. I'm pointing out the irony, not defending the rule per se. > If you want to have an even playing field for investing, every barrier is an obstacle. This clearly isn't true. First, it's sort of prime facie false. Investments usually happen in markets. Markets are human inventions comprised of collections of barriers on behavior and enforcement mechanisms for those barriers. (Investments that happen outside of markets do exist, but they usually involve violence and/or coercion under threat of violence, so probably not what you mean when you say investment.) Second, there are many ready examples. E.g., SEC filings and public exchanges are clear barriers to entry in fund raising, but also clearly level the playing field. The alternative is that the only way to know about a company's finances is to know the right people.
- TheColorYellow 4y ago
  Equating public financial statements with "transparency" is a fallacy. It creates moral hazard and over-emphasizes private audit facilities. Is it objectively better than non-public financial statements? Maybe. Is it worth saying this alone should draw the line on what is considered a "safe" investment? No. Again, the OP is asking about access, not what you believe about "transparent investments"

skybrian 4y ago

Um, being an accredited investor gives you exposure to investments that aren’t transparent. You don’t get the same access to financial statements as with public companies. If you want more transparent investments then you should be advocating for reforms that will encourage companies to go public sooner. This would be reversing the trend in recent years where companies stay private longer, which allows them to not disclose how they’re doing.

datadata 4y ago
Accredited investor rules was an example of not having a even playing field. The market is not open to everyone which contributes to unfair outcomes. I'd welcome reforms to transparency as well there, as lack of transparency also contributes to unfair outcomes (the company can exploit investors).
- jakelazaroff 4y ago
  The accredited investor rules are in place to protect people who can’t bear the losses from an extremely adversarial financial system. I promise you that even if you get rid of the rules, people with a few thousand dollars to spend still would not have access to the best investments.
  - datadata 4y ago
    I believe that every financial transaction has the potential to be adversarial, there are many ways outside of investing that the poor are disproportionately exploited (lotteries, debt interest). I think the libertarian perspective is that we shouldn't have protections that prevent people from making personal choices that result in harm to themselves, but only from harming others. I think that transparency for the companies seeking investment, or education of the investors themselves are better ways to restrict investment. Net worth/Income is not a fair criteria.
    - kyleplum 4y ago
      > I think the libertarian perspective is that we shouldn't have protections that prevent people from making personal choices that result in harm to themselves, but only from harming others. There are a few ways that someone bankrupting themselves via bad investments does hurt others: Dependents will be significantly harmed They are more likely to end up homeless or in jail on the dime of society They are less likely to be a productive member of society. I suppose the libertarian response would be that if someone bankrupts themselves, let them die homeless on the street - but I don't think you'll get agreement from any significant portion of society on that approach and even then someone has to pay to clean up their body.
- skybrian 4y ago
  Could you be clearer about what you mean by transparency? Do you think private companies should make their financial statements public? Do they need to be audited?
  - FabHK 4y ago
    One could argue that companies ought to go public sooner, with the concomitant obligations and transparency on one hand, and the investment opportunities for unaccredited investors on the other. Rules with criteria such as revenue, employees, or something could achieve that.
  - datadata 4y ago
    I think trading on the basis of private information at the expense of other shareholders without the same information is the problem. I'm less concerned about the specifics of filing requirements, and more concerned about information asymmetry regardless of auditing/reporting obligations. I'm not sure I know enough to recommend a specific policy here, my original comment was just what I believe to be some of the flaws that 'crypto fans' see in traditional systems.
    - skybrian 4y ago
      Okay, fair enough! However, reporting requirements and auditing are all about making sure everyone has access to the same, accurate information about a company's financial situation. Insiders will learn about changes in a company's finances before outsiders. If they can disclose this to some investors but not others, or even disclose it to some investors first, then that increases information asymmetry. But this doesn't seem to be something that crypto fans are interested in, because they're not really investing in companies?
      - datadata 4y ago
        I think if the investment story of companies was better, maybe there would be less demand for crypto in the first place? Another big appeal is that in crypto the rules (governing the crypto itself) are not changeable by humans. This eliminates a large category of manipulation by insiders (while opening the door to other problems).
- jcranberry 4y ago
  Accredited investing requirements are to keep non-experts or people without money to lose from being swindled by companies which aren't required to be transparent with their financials.
  - TheColorYellow 4y ago
    Public companies swindle quite often, and usually with more catastrophic results. When are we going to admit that the current rules are no longer working?
    - Goronmon 4y ago
      So then you agree that accredited investing requirements aren't the problem?
    - FabHK 4y ago
      So, given that companies swindle with catastrophic results, you're suggesting to have fewer rules and regulations? Less enforcement and oversight?
- thwayunion 4y ago
  > Accredited investor rules was an example of not having a even playing field. 1. Having an income that qualifies you as an accredited investor doesn't mean that you will have access to higher quality investments. 2. Even if you don't qualify as an accredited investor, you probably still have access to the same set of investments that a capital-poor accredited investor has access to. As an accredited investor, I've never had access to an investment opportunity which I couldn't have also accessed without being an accredited investor. No one checks, and the "opportunities" are mostly not great anyways unless you have a lot of capital and connections. The operative things that unlock unfair investment opportunities are 1. one's professional network (or family), and 2. access to large amounts of capital. You can counter this assertion by providing a list of investments which are open to all accredited investors, do not require significant amounts of capital, and which have higher expected return with lower risk than investments that are available to non-accredited investors. The common misconception that becoming an accredited investor suddenly gives you access to high quality investments with super high returns for low risk is one of the best justifications I've ever seen for keeping the rule in place... which is particularly funny because I'm not even an avid fan of the accredited investor rule.
  - datadata 4y ago
    You are basically saying that accredited investor rules are not successful in excluding people from making certain types of more desirable investments, because there are other barriers that are in place anyway. I think this is true, but beside the point. If you want to have an even playing field for investing, every barrier is an obstacle.
    - thwayunion 4y ago
      > I think this is true, but beside the point. I think you missed my point. To reiterate: the fact that people believe that it's not true is, ironically, a convincing justification for the accredited investor rule. I'm pointing out the irony, not defending the rule per se. > If you want to have an even playing field for investing, every barrier is an obstacle. This clearly isn't true. First, it's sort of prime facie false. Investments usually happen in markets. Markets are human inventions comprised of collections of barriers on behavior and enforcement mechanisms for those barriers. (Investments that happen outside of markets do exist, but they usually involve violence and/or coercion under threat of violence, so probably not what you mean when you say investment.) Second, there are many ready examples. E.g., SEC filings and public exchanges are clear barriers to entry in fund raising, but also clearly level the playing field. The alternative is that the only way to know about a company's finances is to know the right people.
TheColorYellow 4y ago
Equating public financial statements with "transparency" is a fallacy. It creates moral hazard and over-emphasizes private audit facilities. Is it objectively better than non-public financial statements? Maybe. Is it worth saying this alone should draw the line on what is considered a "safe" investment? No. Again, the OP is asking about access, not what you believe about "transparent investments"