Understanding the risks and ignoring the risks are two entirely different things... The current law basically says that anyone without $1 million and $200k in the bank is too stupid to invest in a startup but someone with that money is smart enough to. If they don't have to make those disclosures to people with lots of money now, why should they have to make them if they're crowdfunded (where people actually stand to lose less because the risk is spread over a larger pool)? I could see an argument for making those disclosures even with the system as it is now, but that argument is something entirely separate from the crowdfunding argument.
Edit: It seems I missed your "can of worms" comment. I guess I just really don't like the fact that the US govt has and is continuing to treat its citizens like they're mentally incapacitated. Now a lot of us do behave that way, but I don't think it's the government's place to try to change that behavior. The market will do that when they lose their money. If they don't learn their lesson, that's their own problem.
2011- 1,100 seeded startups.
2004- Year Facebook formed.
2012-Facebook's valuation: est. $100 billion.
If you say that 1,100 companies are seeded a year (which is not true, only 885 in 2009, 850 in 2008) and multiply that by 8 years (2004-2012), you get 8,800 startups to invest in. So EVEN IF 8,799 of those companies failed, if you invested in every single one you'ld have a 250% return in 8 years during a down market. That's amazing.
But those 8,799 didn't fail. If 1% succeeded you'ld have 88 companies still left in your portfolio IN ADDITION to your Facebook stock.
This is why we need crowdfunding so badly. Without it, wealth is pumped to people who have so much wealth that they can't spend it all. With crowdfunding, capitalism works to spread that money around to people who can spend all of it. We're talking an explosion of wealth in this country and it wasn't from some stupid government debt plan.
Going public is incredibly expensive and is only worth it if you're needing to raise $50million+. A small company therefore doesn't have access to the public markets nor do the public markets have access to the small companies that make this country strong.
When you do the math on $10 in Facebook stock at founding vs. what it's worth now, you find out that you could have invested in 20,000 startups and even if every single one of them failed except for Facebook, you would have lost NO money. The risk is non-existent. It's a fear tactic.
If the legislation passes, will the intermediary companies be responsible for educating the roughly 230 million new investors in the country or will the government take an active role in this process?
I think I saw that two of the spots for this workaway are being given away as a prize for the AngelHack competition(?) I'd go just to be able to spend time working with that kind of talent.