It’s not about the regulations, it’s about the regulatory ecosystem...
"We don't worry too much about the crop itself - we take care of the whole ecosystem." - Leontino Balbo Junior, regenerative organic sugar farmer
For nearly a century, the SEC has operated with what I call 'Extractive Regulating' - a mindset borrowed straight from industrial agriculture.
Just like Big Ag farmers obsess over maximizing crop yields at any cost, our financial regulators have laser-focused on "investor protection" while systematically poisoning the very ecosystem they claim to nurture.
Their pesticides? Quarterly reporting mandates and fiduciary duty structures that institutionalize profit maximization - systematically neglecting the long-term health of workers, communities, and the broader economy in favor of protecting investors at all costs.
Their herbicides? Compliance costs so prohibitive that only the largest concentrations of wealth can afford to access public markets, effectively sterilizing the soil for entrepreneurial growth.
The result? A public stock market reduced to the "Magnificent Seven" and a handful of institutional investors, where true price discovery has been replaced by algorithmic concentration, innovation has been stifled by scale requirements, and the diverse ecosystem of public companies has withered into a monoculture of mega-cap dominance.
But here's the deeper issue: in our own crowdfunding industry, we must learn from the mistakes of the past and avoid focusing on the regulations themselves - because when we obsess over compliance requirements, we incentivize portals to do the bare minimum, just enough to check boxes without truly protecting anyone.
It's like spraying more pesticides when the real issue is soil health.
When we focus on a regenerative regulatory ecosystem approach instead of worrying primarily about investor protection, something beautiful happens: portals start developing organic solutions for investor protection.
Honeycomb Credit, SMBX and Climatize - they innovate beyond compliance. They offer low minimum investment requirements, create educational content, encourage crowd-sourced due diligence, develop risk assessment tools - not because they have to, but because healthy ecosystems demand it.
When Leontino switched to regenerative farming, his land's productivity increased by 20%.
Yet he is still a farmer that regulates his ecosystem..
Imagine what we could accomplish if securities regulation was truly regenerative:
Nurturing market-based protection measures to improve on what is already naturally working.
Michael Shuman, community economist and publisher of The Main Street Journal, has long advocated for no artificial investment limits with $100 or less investing.
Diversification is a time tested risk mitigation strategy, let’s support and nurture low minimum investment requirements.
Expanding retail investor access to private credit by recognizing the fundamental risk differences between equity and debt.
By many metrics private credit has outperformed the stock market since 2008 - yet retail investors remain mostly locked out.
This is what regenerative regulation would look like in practice.
Ultimately we want regulators encouraging organic innovation in investor protection rather than compliance theater.
Reg CF is proving that when you nurture the regulatory ecosystem, organic solutions emerge that protect investors better than any top-down mandate ever could.
At the CfPA we recognize that we are an ecosystem. Let’s continue to be intentional - not just with thoughtful regulation advocacy but shifting the paradigm towards an entire regenerative regulatory ecosystem.
Because the future of finance isn't about protecting investors from opportunity.
It's about creating conditions where capital, community, and innovation can flourish together - at scale.
What organic solutions have you seen emerge when platforms focus on ecosystem health rather than just compliance?
