This is a rather skewed representation of what's happening. That a series of people not qualified to run a securities exchange have stepped up in an attempt to bring low-boundary, incredibly sketchy non-solutions to "the community" at large and have subsequently found themselves in over their heads does not mean the problem is "the current set of regulation". The problem is that finance is not a mass consumer thing to be packaged up and handed out by anyone at all with a hope and a dream.
There's a big difference between the sort of red tape regulation nonsense governments have no business injecting here and enforcing simple, established, powerful rules that keep scammy and otherwise worthless stuff out.
I agree with you. And you were right about Labcoin being a total scam. I do want regulation of issuers and I do think issuers should be checked and held accountable by the SEC if necessary. But what does regulating corporations have to do with preventing investors from investing?
I'm all for making corporations become transparent and regulated so that people aren't scammed and don't lose their money. The current set of SEC rules don't make any sense at all and don't apply very well for the particular situations you see in the Bitcoin community. Bitcoin investors do not want the SEC interfering with their ability to invest, region blocking, or invading their privacy. I also don't think Bitcoin investors want to mistakenly fund terrorism, or be involved in money laundering.
The problem is fraud, scams, money laundering and terrorist finance. The regulations of the SEC don't really apply to Bitcoin with it's decentralized concepts and P2P digital money. For example with Bitcoin everyone is pseudo-anonymous, does knowing an investor prevent money laundering? No not necessarily. But it does make sense if someone were trying to move large amounts of Bitcoins or to have suspicious activity which looks like money laundering to have an ability to look more closely at that. The fork in the road is between those developers who push for anonymity and those who don't. Anonymity means every individual will have to report directly to the government similar to how you have to report your earnings to the IRS while transparency on the blockchain would allow the blockchain to report it all. Either way we will have to interface with the government at some point.
The benefit of digital is that you can be selective. Small investors should not be scrutinized or forced to give up their privacy. That means if someone is not investing large amounts of Bitcoins at the time there shouldn't be a need for verification anyway. Money laundering is usually something which takes place with large amounts of Bitcoins. If all the Bitcoins are anonymous this presents a problem though, because if a terrorist or money laundering situation does happen it puts a bad light on the entire Bitcoin economy if every transaction is hidden from authorities and this forces authorities to detain, question, and eventually make everyone report their activities.
At this time while it is true that there are a lot of illicit Bitcoins floating around out there, and a lot of scams, a lot of fraud and theft, the SEC has no solutions and until the Bitcoin community takes it seriously it's not even the SEC's fault entirely.
What do you propose should be done to prevent scams? fraud and money laundering? Should we have anonymity? if we do then how do we report a scam, a crime, or prove our innocence?