Before Facebook paid $2 billion last week to buy Oculus VR, a virtual reality headset maker, 9,500 people donated $2.4 million via Kickstarter, the crowdfunding website, to get Oculus off the ground. Those early donors got thank-you notes, T-shirts or prototype headsets, but not a piece of the company. Donations through Kickstarter are just that, donations, not investments.

Oculus’s success, however, has stoked broad public interest in crowdfunding as a way to invest for profit. Currently, only high-net-worth, high-income investors can legally invest in start-ups through crowdfunding sites. But soon, legislative and regulatory changes will open the sites to everyone.

That is where the Securities and Exchange Commission, with its explicit mission to protect investors, is supposed to come in. But the agency’s proposed crowdfunding rules, to be finalized in the months ahead, are a joke.

Here’s how this happened. In an election-year sop to special interests, Congress passed a law in 2012 to end or loosen many bedrock investor protections, on the grounds that deregulation would make it easier for companies to raise money. Among its changes, the law, deceptively named the JOBS Act, called for the S.E.C. to write rules to establish a crowdfunding marketplace where companies could raise up to $1 million a year without having to meet disclosure and accounting standards that had long applied whenever private ventures raised money from the public. Perhaps the law’s one and only saving grace was that it also required the S.E.C. to put in place new safeguards against the heightened potential in crowdfunding for big losses from fraudulent or unsuitable offerings.