| What crypto has unveiled is the total and utter moral and intellectual bankruptcy of financial regulations. Take token sales. Before the SEC entered the scene in 2017, tens of thousands, and possibly millions of people were able to participate in early stage investment. The result is that those projects that conducted their initial round of venture capital fundraising before 2017, via permissionless token sales, have a much more distributed ownership structure than those that conducted their initial round in accordance with SEC rules: https://i.ibb.co/qCjJWJb/FAK6ao-HVc-AAg-V-i.jpg Amongst the projects listed in the graph, Ethereum, Cardano, Cosmos, PolkaDot, Tron, EOS and Tezos all had their initial token sale before the SEC's involvement in 2017, and consequently have majority public/community ownership of their tokens. Some of these projects, like Ethereum, gave ordinary people 1,000X+ returns on their investment. A study on this brief experiment in permissionless, unregulated venture capital financing concurs, unveiling that token sales massively expanded financial inclusivity: https://link.springer.com/article/10.1007/s11408-020-00366-0 "The average ICO has almost 4700 contributors. The median contributor invests a relatively small amount. The ICO market appears to have successfully given access to the financing of innovation to a new class of investors, which is a long-standing public policy issue" The rest of the platforms in the graphic, like Flow, Solana and Avalanche, conducted their initial token sale after SEC involvement, and the majority of their tokens are consequently owned by insiders, constituted by a tiny cadre of VC firms, who got to monopolize the initial token sale and thus enjoy 1,000X+ gains. This amounts to an obscene exacerbation of wealth inequality in the crypto space, due to SEC enforcement of securities regulations. Now the old token sale could be shut down by the SEC. New methods of token distribution and project bootstapping cannot be, or at least cannot so easily, and they are resurrecting the financial renaissance that existed between early 2016 and late 2017. |
