[CryptoPunk]

>>It's been fascinating to watch this space rediscover the reasons that the regulations were created in the first place.

There are no regulations needed to go after fraudsters. If someone is committing fraud, they can be prosecuted under common law.

So this space is not rediscovering anything. Everyone supports fraud being prosecuted.

What everyone doesn't support is the creation of a centralized gatekeeper and a preemptive blanket ban on an entire category of digital value/information exchange, that is only lifted on a case-by-case basis if one is approved/registered by/with that gatekeeper.

In other words, people oppose a law being passed to treat non-security tokens the way securities are treated now. That would be disastrous for personal freedom and economic evolution.

[wpietri]

> There are no regulations needed to go after fraudsters. If someone is committing fraud, they can be prosecuted under common law.

This is apparently written from theory, not from data. Actual successful financial marketplaces, like the ones I named, have much more stringent regulations than that. Why? Because waiting for a fraud to blow up and then hoping the police can crack down on it is immensely damaging. Not only to the people who get suckered, but to everybody who hopes to use the marketplace.

Think of it like food safety laws. In theory, the marketplace would take care of this, driving unsafe restaurants out of business through the magic of the invisible hand (plus a lot of visible vomiting from food poisoning). In practice, though, everybody supports food inspectors, food safety ratings, etc. Even restaurant owners, because they want people to not even think about safety. A trusted, regulated marketplace benefits all sincere participants.

> What everyone doesn't support is the creation of a centralized gatekeeper [...]

Sure. And we'll see how that works out.

Historically, gatekeeping behavior both from regulators like the CFTC and the SEC and from marketplaces like the NYSE and NASDAQ arose in response to problems. It's not something people just made up.

Now that the same problems are happening here, I expect there will be some response. Partly, it is regulators coming along and applying existing financial laws. Partly, it will be investors abandoning the whole asset class. But there's also room for the industry to self-regulate. Will the antiregulatory fetish, as typified by your response, win out? Or will, as often happens with other industries, some self-regulation happen?

I look forward to finding out.

[CryptoPunk]

>>Actual successful financial marketplaces, like the ones I named, have much more stringent regulations than that. Why? Because waiting for a fraud to blow up and then hoping the police can crack down on it is immensely damaging.

There is no data to support your assertion. We don't have a control to see what the effect of regulation has been. How can you confidently conclude that regulations made the markets more successful, and that a traditional deterrence approach to fraud wouldn't have worked even better? You can't.

>>Think of it like food safety laws. In theory, the marketplace would take care of this, driving unsafe restaurants out of business through the magic of the invisible hand ... In practice, though, everybody supports food inspectors, ... A trusted, regulated marketplace benefits all sincere participants.

You have not provided any evidence for your last assertion. A policy being wildly popular doesn't mean it's socially constructive or ethical.

>>Historically, gatekeeping behavior both from regulators like the CFTC and the SEC and from marketplaces like the NYSE and NASDAQ arose in response to problems. It's not something people just made up.

Of course, and the War on Drug arose in response to the problem of drug abuse. Alcohol Prohibition arose in response to alcohol abuse. The Iraq invasion and Patriot Act arose in response to terrorism. It doesn't mean the response is either ethical or socially constructive.

>>Now that the same problems are happening here, I expect there will be some response. Partly, it is regulators coming along and applying existing financial laws. Partly, it will be investors abandoning the whole asset class.

I suspect neither of these things will happen. The sector will remain effectively unregulated due to the near impossibility of censoring cryptocurrency transactions, and investors will wisen up just as they have for the last six years in cryptocurrency. Online server side wallets use to be a big thing in Bitcoin. After a string of exit scams and hacks, the collective intelligence increased, and cryptocurrency communities began strongly urging people to avoid such wallets. I suspect a similar spontaneous evolution will happen with token sales as the community matures.

All gatekeeper regulations will do is rob the US of business and cause unnecessary human suffering for those caught in the dragnet.

>>But there's also room for the industry to self-regulate. Will the antiregulatory fetish, as typified by your response, win out? Or will, as often happens with other industries, some self-regulation happen?

It is not a fetish to not want to be subservient to a centralized gatekeeper and be forced to get permission from it to interact with other adults. It is belief in the basic value of human freedom.

[wpietri]

> There is no data to support your assertion. We don't have a control to see what the effect of regulation has been.

The data is called "history".

The US started with no financial regulation; we got regulations and regulatory agencies over time, mostly in response to problems. The exchanges whose history I'm familiar with started small and became more internally regulated over time, again in response to actual problems. Those exchanges were generally run by traders, who are dispositionally anti-regulation. But they are also strongly motivated to have smooth-running marketplaces that are generally trusted. So they made some tradeoffs and found ones they were pretty happy with.

The fact that no devil-may-care marketplace has survived, and the fact that countries with successful financial marketplaces have all converged on similar approaches is as reasonable set of evidence that regulation has value to market participants. You will never really have a control group, because the "no regulation" control group fails hard enough that it isn't sustainable.

> A policy being wildly popular doesn't mean it's socially constructive or ethical.

It doesn't prove it, but for regulations that are popular with all sorts of market participants, it's excellent evidence. The alternative explanation, that you alone are way smarter than all the people who are experienced professionals on many sides of the marketplace, is not particularly persuasive.

> It is not a fetish to not want to be subservient to a centralized gatekeeper and be forced to get permission from it to interact with other adults.

Sure. A desire only becomes a fetish when the desire becomes hugely dominant, pushing all rational consideration aside. Which I believe is often the case in the cryptocurrency/ICO space. For whatever reason, cryptocurrency advocates often value the "you're not my DAD" kind of freedom way more than they value success.

As an example, look at Bitcoin. 8 years in, and its real-world, non-criminal use is approximately zero. That's despite all the hype about Bitcoin international money transfers, Bitcoin shopping, Bitcoin ATMs, et cetera, ad nauseam. In roughly the same time M-PESA has ended up with 30 million users and 6 billion transactions per year. And those are actually useful transactions, not financial speculation.

I have no beef with cryptocurrency advocates pursuing their personal desire for radical independence. Godspeed, and may their Heinlein novels find a nice spot in their seasteading cabin. But I do object to the enormous ahistorical hype and denial that has gone along with it.

It's fine to say, "Well, sure, regulation would make things better for many practical use cases, but we think a high endemic level of fraud and low real-world impact is an ok price to pay for the very narrow kind of freedom we're dedicated to." But I don't appreciate the quasi-religious evangelicalism about the magic power of technology and markets to make everything sunshine and rainbows; and the concomitant notion that the rest of society should just follow their vision and values, never mind the human cost.

[CryptoPunk]

>>The data is called "history". The US started with no financial regulation; we got regulations and regulatory agencies over time, mostly in response to problems.

I've already addressed the weakness of this rationale, and provided multiple examples where even you might agree that institutional and social acceptance is not aligned with good policy.

>>The fact that no devil-may-care marketplace has survived, and the fact that countries with successful financial marketplaces have all converged on similar approaches is as reasonable set of evidence that regulation has value to market participants.

There is absolutely no evidence for your assertion. I present to you guilds:

https://en.wikipedia.org/wiki/Guild#Fall_of_the_guilds

>>As Ogilvie (2004) shows, the guilds negatively affected quality, skills, and innovation. Through what economists now call "rent-seeking" they imposed deadweight losses on the economy. Ogilvie says they generated no demonstrable positive externalities and notes that industry began to flourish only after the guilds faded away. Guilds persisted over the centuries because they redistributed resources to politically powerful merchants. On the other hand, Ogilvie agrees, guilds created "social capital" of shared norms, common information, mutual sanctions, and collective political action. This social capital benefited guild members, even as it hurt outsiders.[24]

We're not in an age of enlightenment. It's entirely possible that the dominant social forces support regulations while said regulations do harm on the balance.

>>It doesn't prove it, but for regulations that are popular with all sorts of market participants, it's excellent evidence.

I strongly disagree. The opinion of the average person on a complex economic subject is about as reliable an indicator of truth as their opinion on the innocence or guilt of a person charged with a crime. With special interests involved, public opinion could easily be swayed.

There's a reason we have a court of law with deliberations in the justice system. Opinion polls are not a credible barometer of the truth.

>>Which I believe is often the case in the cryptocurrency/ICO space. For whatever reason, cryptocurrency advocates often value the "you're not my DAD" kind of freedom way more than they value success.

I don't see why you mock this viewpoint. The government is not our dad. We have legal principles like the First Amendment, that says that "Congress shall make no law * abridging the freedom of speech", and it arose out of a philosophical belief in the inherent right of Man to his freedom. To mock it as if people should accept others dictating their personal life decisions seems totally irrational to me. Why would you not want people to be respected as adults, instead of being treated as children?

How could you not see the danger of abandoning the principle of personal autonomy in voluntary and consensual interactions? There are so many slippery slopes that emerge as that principle is steadily eroded.

>> and the concomitant notion that the rest of society should just follow their vision and values, never mind the human cost.

The rest of society can stay out of cryptocurrency. The side wanting to create centralized gatekeepers are the ones that are the busybodies, sticking their nose where it doesn't belong, to control other people.

[wpietri]

> I've already addressed the weakness of this rationale

You're addressing the wrong rationale. I'm saying that everything started out the way you suggest and none of those things survived.

> It's entirely possible that the dominant social forces support regulations while said regulations do harm on the balance.

It's entirely possible we're living in a simulation controlled by malicious aliens. Anything is possible. But when deciding how to organize our society, we don't have to give all possibilities equal credence.

> The opinion of the average person on a complex economic subject

Yes, but I'm not talking about average people. I'm talking about expert participants in the system, ones with differing interests. When chefs and restaurateurs and doctors and public health officials and eaters of restaurant food and consumer advocates all say, "Yes, we think some basic mandatory health regulations are a good way to run things" then it's a solid sign the regulations are not some sort of one-sided, exploitative thing like the guild system.

> There's a reason we have a court of law with deliberations in the justice system.

Sure. A justice system that time and time again accepts reasonable regulatory burdens in pursuit of broader shared benefit.

> I don't see why you mock this viewpoint. The government is not our dad.

Yes, exactly. The government is us. We the people. When we the people say, "Roads are great, but they would be even better if everybody going the same way drove on the same side of the road," that's government. Does this take away from the freedom of somebody to be independent of government constraint? Sure. Is that a worthwhile trade? Most think so. Is the fact that everybody with roads converges on either the drive-on-the-left or the drive-on-the-right solution and basically nobody minds a sign that this is not some irrational tyranny? Yes, definitely. Parallel evolution tells you something about utility.

I mock it not because there's anything wrong with wanting that kind of freedom, but because some people become fundamentalists about it. I am happy to mock fundamentalists of all stripes. Especially ones who entirely ignore the many other kind of freedom in favor of a fixation on a very particular kind.

> The rest of society can stay out of cryptocurrency.

This is something you are welcome to pursue in a private context, but not a public one. You want to build your own racetrack or lot and drive whichever way you want? Go crazy. But if you want to drive in the US, your options are narrower, because your choices no longer affect just you.

[CryptoPunk]

>>You're addressing the wrong rationale. I'm saying that everything started out the way you suggest and none of those things survived.

I've already addressed this. There's no sense in me repeating myself for a fourth time.

>>Anything is possible. But when deciding how to organize our society, we don't have to give all possibilities equal credence.

Not just possible, but plausible. The dominant social forces supporting rent-seeking institutions that harm the general welfare is not an anomaly.

>>Yes, but I'm not talking about average people. I'm talking about expert participants in the system, ones with differing interests.

You're moving the goalposts. I was addressing your comment about the vast majority of people supporting some given regulation, and pointing out that public opinion in support of something doesn't indicate that it is a good policy.

>>When chefs and restaurateurs and doctors and public health officials and eaters of restaurant food and consumer advocates all say, "Yes, we think some basic mandatory health regulations are a good way to run things" then it's a solid sign the regulations are not some sort of one-sided, exploitative thing like the guild system.

No it isn't. Your argument gives no consideration to the conflicting financial and social interests that these participants can have. The guild system had numerous experts supporting it, and it was horrible for economy at large.

Like Hazlitt noted:

>>“Economics is haunted by more fallacies than any other study known to man. This is no accident. The inherent difficulties of the subject would be great enough in any case, but they are multiplied a thousandfold by a factor that is insignificant in, say, physics, mathematics or medicine - the special pleading of selfish interests. While every group has certain economic interests identical with those of all groups, every group has also, as we shall see, interests antagonistic to those of all other groups. While certain public policies would in the long run benefit everybody, other policies would benefit one group only at the expense of all other groups. The group that would benefit by such policies, having such a direct interest in them, will argue for them plausibly and persistently. It will hire the best buyable minds to devote their whole time to presenting its case. And it will finally either convince the general public that its case is sound, or so befuddle it that clear thinking on the subject becomes next to impossible.

It's not just possible, but highly plausible that the prevalence of regulatory controls limiting the freedom of Man is a result of the "special pleading of selfish interests".

>>Sure. A justice system that time and time again accepts reasonable regulatory burdens in pursuit of broader shared benefit.

The justice system has no choice but to accept regulatory burdens. It is a creature of legislation and has to enforce it. You're going off on a tangent rather than addressing my point about how public opinion is not a reliable barometer for the truth, because it is not based on deliberations by uninterested parties the same way the court system is.

>>Yes, exactly. The government is us. We the people.

We the people do not have the right to violate the rights of an individual through majority vote. Democratic will is not ethical in all its expressions.

>>"Roads are great, but they would be even better if everybody going the same way drove on the same side of the road," that's government.

Rules of use of public resources like roads is incomparable to impositions limiting the right of people to privately interact with other adults in whatever manner they wish.

>>This is something you are welcome to pursue in a private context, but not a public one.

What public one? I'm not using public resources. This is a private forum. There are numerous private cryptocurrency forums as well. You're mischaracterizing the context in which your desired regulations would be applied, to try to extend the power of government and the collective into all domains.

>But if you want to drive in the US, your options are narrower,

Who said anything about me wanting to "drive in the US" according to my rules. You're conflating the use of public roads with communication through private channels like Reddit.

Really what you're implying is that all private resources and private citizens within the United States are public property of the US government, no different than a public road. Your subtle conflation of private forums and interactions with public roads really reveals the philosophy of government control and ownership over everyone that's embedded in your ideology.