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RE: The Way the US Regulates Securities is Absurd
What I would be curious to know is what the implications would be for scrapping this regulatory body entirely. What would be the fallout, presumably? Increased fraud and scams? Money laundering? What is this organizations “purpose”?
It appears that there have been numerous investment "schemes" in which people lost money. The body owes its existence to people who lost money and who cried in the night: "There aught to be a regulation" against what happened to me.
Clearly there is a need for bodies that evaluate the integrity of securities. If this body didn't exists, there would have been other bodies formed to evaluate the integrity of securities.
If this centralized body didn't exists, my guess is that we would have seen a huge number of investor lawsuits along with the formation of independent efforts to verify securities.
Personally, I think that a large number of independent efforts would be more robust than a centralized effort.
The big problem with one huge centralized bureaucracy is that such systems destroy innovation.
So, I should point out that STEEM could be described as a financial scheme. Everyone on this platform has a wallet full of crypto-currency. There is nothing behind this currency other than an algorithm spinning in the sky.
This program fits some definitions of a Ponzi Scheme. The value of the STEEM in my account is 100% dependent on someone coming in and buying STEEM at a future date. We could all wake up one day and find that our STEEM went poof.
How angry would people be if STEEM went poof? Would there be an enraged outcry for regulation!
That said, the effect of the regulation is that it prevented people from openly exploring interesting financial devices like STEEM. I mentioned that I started developing software for exchanges a decade ago and stopped out of fear of regulation.
Rather than talk about what would happen if FINRA didn't exist. I would rather engage in a conversation about what people can do to replace FINRA.
The open ledger and smart contracts of Crypto create a world with far greater disclosure than the founders of FINRA could have imagined in 1939 when the SEC created NASD (predecessor of FINRA).
Can we create such a thing without getting trounced upon by the SEC?
I think the basic open ledger and full disclosure being developed in the crypto world could be used to replace antiquated regulation.