[hal9000xp]

I think the notion of accredited investor is very discriminatory to small investors. It's basically says - if you already wealthy then you have an access to attractive investment opportunities with huge upside (and of course, huge risk), if you are just a middle class man then stay where you are (since your investment options with huge upside are severely limited and you don't have enough capital to make sense from investing in index).

The better version of requirements for accredited investors would be some sort of exam (hard enough to make sure you have solid knowledge about financial markets, financial instruments and risk/return relationship).

[Cshelton]

The effect of missing out on an upside is a lot less than taking a huge hit on the downside. It isn't discriminatory, it's protective.

It is sad but many people would put their entire savings and next months rent into a risky investment that is not publicly traded on a regulated market and basically lose their money most of the time because they invest on hype and because their buddy told them.

If an accredited investor loses his money, the nobody feels bad because they had the money in the first place and the means to either hire somebody who knows what they're doing or be responsible themselves.

I'd be fine with zero regulation on it all together, as long as I, as a tax payer, don't have to bail out all the idiots will fall for ponzi scheme after ponzi scheme. But do we let them dye on the streets because they lost everything? Hence why the regulation is in place.

You are also assuming that being an accredited investor gives you access to better investments, which is not entirely true. Many accredited investors lose their lunch on investments. Look at the number of hedge funds that beat a market index fund, it's like 10%. Or look at VC firms where 1 investment makes up for the loss of 10 others. Many never do get that return and just lose money until they're out. The best investment definition varies widely, and in actuality, most accredited investors would be better off just investing in an index fund because believe it or not, they don't know what they are doing most of the time either. Which is why many investments are high risk. So a test would not help either.

[kolinko]

There other ways to protect small investors - education being one example.

If someone doesn't know how to manage miney they will lose it one way or another - be it forex, or or penny stocks. ICOs cannot possibly be worse than these legal things.

[mtgx]

Yes, but you could make the same argument for companies using toxic substances in their food, too.

"We don't need the government to tell us what is toxic and what isn't. Let's people make their own decision about what they eat!"

Which I know sounds very attractive, but then 90% of the population will end up ingesting food with lead in it from China, or whatever.

[nunez]

well education is supposed to be an answer to people having unprotected sex without consequence, but here we are, millions of STDs and unwanted pregnancies later

if people want to throw in everything they have into speculative currency, then they will. someone's gotta put down the law to at least try and protect damage to the economy when everyone loses their shirts

[jerguismi]

> It isn't discriminatory, it's protective.

I think it is both. The regulation is removing the upside risk as well as the downside risk. Many professional investors are investing to real stupid things and losing their money, it is not that difficult to find examples.

[sanswork]

Is it easy to find examples of ones who have lost so much that they are literally poor?

[mikeyouse]

That's why these rules exist in the first place.. People like "The Jackal of Wall St.":

http://www.thedailybeast.com/articles/2015/10/31/the-best-co...

Or the boiler rooms & microcap fraud in the 1980s/1990s:

https://en.wikipedia.org/wiki/Microcap_stock_fraud

And yep, it was still happening even before the accredited investor criteria was relaxed;

https://www.justice.gov/usao-sdfl/pr/five-defendants-charged...

[sanswork]

Which of those left accredited investors poor and not just down?

[mikeyouse]

All of them? Boiler rooms and stock frauds don't settle for a little bit of money, when they find someone to swindle, they take all of their money. It got so bad during the Great Depression that people actually hung bankruptcy judges.. Google "stock market fraud life savings" and you can find a litany of people who lost everything to these scams.

[microtherion]

Some people lost a lot of money on prosper.com, and at least in some cases, it was known that it was money they couldn't really afford to lose. See e.g. this (and be sure to read the last comment): http://www.bloggingawaydebt.com/2007/01/would-you-lend-75000...

[sanswork]

I've tried to find more up to date information on him since that post is over 7 years old now and can't. Do you have anything more current or more details on the user pensioner?

ericscc.com appears to be gone as well as any of the other prosper forums I've found links to. Not really familiar with the site so is it basically dead or moved out of p2p or something?

[microtherion]

The one forum site that still seems to be active is prospers.org, where pensioner was active as late as 2014. Not much conversation about prosper anymore, though (The old timers still there have thoroughly soured on p2p lending).

prosper.com itself is still in business. AFAIK they have pivoted to a much more conservative lending model. People who invested before 2010 or so generally lost money, some of them a lot of it, but the current model may be sustainable.

[nunez]

So he basically wanted to get into niche payday loans without considering the fact that the interest rates are really high for a really good reason...

[Veratyr]

I think something that makes even less sense is that in theory this is to protect people from making high risk investments yet there's nothing stopping any random person who cares to do so from opening an account with a brokerage and spending their life's savings on far out of the money call options.

[sanswork]

The idea isn't to stop people from doing something stupid but to stop people from trying to get people who aren't in a position to weather risk to do something risky to increase their own likelihood of profiting.

[kolinko]

Forex does exactly that and it's completely legal. Somdoes gambling.

[sanswork]

Forex has regulations for unsophisticated investors in the US.

Gambling is different in that the user goes into it knowing that they have a negative EV. Lots of people lose everything gambling no doubt but while they may hope to win they know the likelihood is that they will lose.

[wmf]

Equity crowdfunding by non-accredited investors is recently legal in the US due to the JOBS Act, yet none of these ICOs use it.

[DennisP]

To raise from the public under the JOBS Act, you have to do your ICO through a regulated platform. As far as I know, none of those support blockchain projects, so it's not actually an option yet.

Plus you can't raise more than a million dollars or so that way. And there's a limit per person, so instead of just sending ETH, everybody would have to go through the platform's KYC, and declare how much income/assets they have.

In the meantime, people in countries with more economic freedom than the U.S. can just deploy a couple pages of code, make some basic efforts to block U.S. investors, and be done with it.

[Cshelton]

Also, to raise under the JOBS act, you pretty much have to do a full accounting audi to the same level as a publically traded company. And I think there is a limit of $50k for each person you raise from with a certain max in total raised. All in all, half of the money raised would go to paying for the funding to begin with, making it very very seldom used.