If the CFTC does this, I hope they limit it to investments / valuations of $1B or more, as seed-stage companies shouldn't have to pay for an audit, etc.
This is what happened with Sarbanes Oxley where they overregulated the IPO process and caused the companies to stay private (and uninspected) for longer as well as removing the post-IPO growth upside from retail investors [1].
This is not to mention the recent SPAC craze being a way to get around this as well, which ended up with the median SPAC losing 70% of its value, while the S&P lost roughly 1/4 of that over the same period. [2]
There's a sweet spot for this kind of regulation, and overly "get tough" never works more than sensible restrictions where the risk is highest.
This is what happened with Sarbanes Oxley where they overregulated the IPO process and caused the companies to stay private (and uninspected) for longer as well as removing the post-IPO growth upside from retail investors [1].
This is not to mention the recent SPAC craze being a way to get around this as well, which ended up with the median SPAC losing 70% of its value, while the S&P lost roughly 1/4 of that over the same period. [2]
There's a sweet spot for this kind of regulation, and overly "get tough" never works more than sensible restrictions where the risk is highest.
[1] https://en.wikipedia.org/wiki/Sarbanes%E2%80%93Oxley_Act#Cri...
[2] https://www.fa-mag.com/news/spac-euphoria-turns-into-painful...