More importantly, they vastly reduce both the frequency and the scope for this sort of malfeasance.
If MtGox had been expecting to face bank audits, they would have been forced to a) hire some people who actually understood finance, b) would have had much better internal accounting controls, and c) would have had a much harder time blowing up quite so thoroughly.
When I hear people carping about "unnecessary regulation" I imagine some guy looking up at a major bridge and saying, "Ha! You don't need half that metal. I could have done it for way less." Maybe he's right. But more likely, he isn't thinking about high winds, earthquakes, and all of the other extreme circumstances that are the real drivers for how thick the supporting pillars have to be.
However, I think everyone screaming "see! regulation works!" is completely forgetting that this site really did bring Bitcoin up from some obscure hacker/modder toy into what it became today. Perhaps some other site would have filled the void, but with regulation mtgox or anything like it could not have existed.
So yes, regulation has it's places. However, regulation would have made these early "bootstrap" exchanges unworkable, and probably criminal. How does that help anyone either?
If MtGox had been expecting to face bank audits, they would have been forced to a) hire some people who actually understood finance, b) would have had much better internal accounting controls, and c) would have had a much harder time blowing up quite so thoroughly.
When I hear people carping about "unnecessary regulation" I imagine some guy looking up at a major bridge and saying, "Ha! You don't need half that metal. I could have done it for way less." Maybe he's right. But more likely, he isn't thinking about high winds, earthquakes, and all of the other extreme circumstances that are the real drivers for how thick the supporting pillars have to be.