In the 2020s, a lot of crypto projects raised a lot of money from the general public, often by making false promises. People rushed to buy crypto, and borrowed money to juice their speculative bets. Then there was a crash and a “crypto winter.” You could, in late 2022, have imagined various possible futures. You could have imagined a permanent crypto winter: Burned by the crash, people might just lose interest in crypto. Or you could have imagined something like what happened to stocks in the 1930s: Burned by the crash, Congress might have made new rules to restore confidence in crypto markets, to require disclosure and regulate conflicts of interest and impose capital requirements. (And we have seen some of that; the Genius Act imposes capital requirements on stablecoins.)

But I personally would not have predicted this future. Instead of regulators imposing disclosure and trading rules to make crypto more like the stock market, the financial industry seems to be finding a way to get rid of disclosure and trading rules in the stock market, to make the stock market more like crypto.

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FROM:

Matt Levine

Money Stuff: The Stocks Will Be Tokenized

I just want to be clear about what he is saying, about what is happening. “The general public should be able to buy shares of private companies” is an oxymoron. What makes a company “private” is that (1) it is not available to the general public and (2) it is not required to follow US public-company disclosure rules. Therefore, “the general public should be able to buy shares of private companies” means “companies should be allowed to sell stock to the general public without following disclosure rules.” That is not a crazy thing to think: Maybe you think the disclosure rules are outdated and expensive, that they deter innovation and capital formation, that they cannot be reformed and so we should just get rid of them entirely. But that is what we are doing here.