The Daily Grind: Should government regulate crowdfunding?

Star Citizen
Earlier this week, the US Securities and Exchange Commission proposed rules for regulating public equity crowdfunding that could hit as early as February of next year. If adopted, these rules could affect kickstarters and similar ventures dramatically, according to Forbes. Notably, the regulations would cap crowdfunding investment revenue at $1 million dollars per year, limit individual contributions according to income, eliminate most advertising, and require management through a registered brokerage. The rules are intended to allow crowdfunding ventures to legally sell shares and accept investors, not just rely on donations as we see in the typical MMO kickstarter. But as Forbes argues, the rules won't necessarily have the intended effect as typical project creators can't actually afford to meet the regulations since that's why they were using crowdfunding in the first place.

We wonder whether Congress and the SEC will target donation-driven crowdfunding next. It seems to me that at least in MMOland, a lot of studios would struggle, whether they're Star Citizen with 24 million bucks raised to date or Baby's First MMO Startup with two part-time employees and a cat running PR. Then again, kickstarter frauds aren't unheard of, and a lot of people have seen their donations-that-sure-sound-like-investments go down the toilet. What's your take? Should the SEC be regulating crowdfunding ventures the way it would any other investment or fundraising method?

[Our original question assumed that Kickstarter donations would be affected. Updates to the SEC proposal have made it clear this is not the case, so we have updated the premise here accordingly, though the question still stands.]

Every morning, the Massively bloggers probe the minds of their readers with deep, thought-provoking questions about that most serious of topics: massively online gaming. We crave your opinions, so grab your caffeinated beverage of choice and chime in on today's Daily Grind!

This article was originally published on Massively.