Cryptocurrencies Challenge Traditional Investment Restrictions Amid Gambling Expansion
Summary:
The article discusses the expanding legality of gambling in the U.S. versus restrictive investment laws that limit startup and venture capital investments to accredited or "sophisticated" investors. It critiques the government's preference for people to gamble rather than invest in potentially successful startups. Highlighting the irony of laws designed to protect investors while allowing risky gambling, this article also notes how certain financial dynamics contribute to wealth inequality. The piece further emphasizes how cryptocurrencies offer an alternative by being accessible to the public and having shown excellent performance, causing a shift in traditional investment patterns.
The legality of gambling is expanding across the United States, with numerous casinos emerging beyond the confines of Las Vegas, and traditional opponents, such as professional sports leagues, coming to terms with sports betting. Although there are certain age limitations, gambling is largely accepted and accessible to everyone, despite its doubtful societal benefits. However, the same freedom does not apply to startup investment or backing venture capital or art collectible funds which are only open to "accredited investors". The U.S. government seems to prefer citizens fling their money at casino games where the odds of losing are high instead of potential startups.
Accredited investor laws limit certain investment options to "sophisticated investors", but sophistication is not determined via experience or knowledge. Instead, it's gauged by financial status – an income equal or exceeding $200,000, five times the median U.S. income, or net worth greater than $1 million is the basic criteria. Regardless of an individual's awareness of the investment, their wealth supersedes all else. For example, a 60-year old inheritor of his family's construction business can invest in AI startups, while a 24-year old machine learning graduate cannot.
Ironically, most financial disasters involve affluent individuals, making these laws more of classist stipulations than protective measures for the masses. Simultaneously, the government enables the same masses to stake money on lotteries or sports betting with measly winning chances. Often designed to target the lower-income population, the lottery is referred to as a "regressive tax" by economists.
These dynamics contribute significantly to wealth inequality. The wealth gap has increased due to a longstanding trend where capital appreciation has outpaced wage growth. In other words, investors have been reaping more benefits than salaried individuals. Assets available exclusively to the wealthy have seen the most substantial growth.
Cryptocurrencies like Bitcoin and Ethereum have disrupted this cycle by offering public accessibility and performing exceptionally well. However, ever since the U.S. government declared Ethereum's initial public offering (ICO) illegal, due to its public participation, most crypto projects now seek funding solely from accredited venture capitalists or angel investors. Crypto-projects further limit eligible recipients for their airdrops in an effort to supposedly safeguard the public.
Meanwhile, intricate same-day parlays before professional sports matches can be promoted to the masses without any objection by the government. Interestingly, over 50% of Americans reportedly gambled in the past year, while less than 20% qualify as accredited investors.
Cryptocurrencies present a mirror to our society, highlighting our outdated legal and regulatory systems and offering potential alternatives. While we often associate this reflection with technological progression, it more pertinently reveals problematic societal and legal facets.
Omid Malekan, a guest columnist for Cointelegraph, adjunct professor at Columbia Business School, and author of "Re-Architecting Trust: The Curse of History and the Crypto Cure for Money, Markets, and Platforms", shares this opinion. This content serves informative purposes only and should not be regarded as legal or investment advice. All views, ideas, and beliefs expressed are solely those of the author and may not necessarily align with Cointelegraph's perspective.
Published At
5/30/2024 8:26:50 PM
Disclaimer: Algoine does not endorse any content or product on this page. Readers should conduct their own research before taking any actions related to the asset, company, or any information in this article and assume full responsibility for their decisions. This article should not be considered as investment advice. Our news is prepared with AI support.
Do you suspect this content may be misleading, incomplete, or inappropriate in any way, requiring modification or removal?
We appreciate your report.