I share some of your sentiment. I’m also an investor in Filecoin, having done so through the CoinList platform as an accredited investor. I agree they took a wise approach to their offering, even if that’s characterized as “least bad.”
But, I find the references to the SEC here a bit overdone, and the suggestion that the SEC will shut down exchanges is a bit underthought out.
Crypto coins and crypto tokens represent world currencies and world protocols. I do not believe anyone should be trying to fit everything into the round hole of a particular jurisdiction’s regulations. Most fiat venture funding is raised in the United States and, therefore, subject to the Howey test and the SEC’s rules. That doesn’t have to apply to crypto coins and tokens.
Personally, I believe it’s presumptive to suggest that exchanges or coin offerings should bow to the SEC’s rules just because that’s the largest enforcement arm in the world at the moment. The SEC may try to shut down some exchanges. They’ll just go elsewhere or new ones will crop up. The SEC may try to prohibit token offerings that don’t meet SEC rules. They’ll go elsewhere and try to exclude US investors, and some clever US investors will still find a way to play. The SEC may refuse to approve crypto ETFs. Eventually, they’ll go elsewhere and get approval. The days when one jurisdiction’s laws can set the standard, like California’s emissions laws for the auto industry, are over.
CoinList has done a good job of trying to devise a platform that will accommodate local investors’ regulations. But, it’s my belief that this should be a temporary measure. The long-term approach should be to develop an attractive, self-regulated platform divorced from local regulation. Then, let the market decide.
At present, it’s the wild west. Many projects will fail; many investors will get burned. It will happen, just as it does in the somewhat regulated early VC fiat space — the vast majority of those projects fail, but a few succeed spectacularly.
Will that cause dark clouds in the crypto coin and token space when it happens? Almost definitely, although I hesitate to predict how long a correction might last. And, those same market forces will regulate the froth that we’re seeing now. Investors who have experienced failure will be more careful the next time. They may look for a platform with rules to help them navigate what’s viable and what’s a scam, or to an advisor or professionally managed fund to curate the process. Some investors, having been burned, may not have sufficient funds to make future investments. It’s Darwinism. Caveat emptor.
