Bulletpoints:
• John Reed Stark, former SEC Chief, criticized cryptocurrency lobbyists for labeling SEC enforcement actions as “regulation by enforcement”.
• He believes the argument is “sorely misguided” because that is exactly how securities regulations work.
• SEC enforcement efforts have paved the way for legitimate technological innovations to flourish, rendering markets more efficient and transparent.
John Reed Stark, former Chief of the Securities, and Exchange Commission (SEC) Office of Internet Enforcement, has lambasted „cryptocurrency lobbyists“ for labeling SEC enforcement actions as „regulation by enforcement“. He believes the argument is „sorely misguided“, claiming that is exactly how securities regulations work.
Stark, a crypto skeptic, stated in a blog post on 22 January that the argument is completely misguided. Securities regulation, according to Stark, works through litigation and enforcement. The adaptability of SEC statutory weaponry is an SEC hallmark, allowing SEC enforcement to combat fraud. He added that the repetitive chorus of “regulation by enforcement” is not only a misguided, deflective effort designed to tap into sympathetic libertarian and anti-regulatory mores, but also utter nonsense.
When the SEC Office of Internet Enforcement was established in 1998, there were apprehensions that the regulations were too vague and that regulation by enforcement would curtail the growth of the internet. Stark notes that in retrospect, relying on the flexibility of securities regulation to police the internet was a mistake.
The SEC has handled multiple high-profile crypto cases. Stark wrote that vigorous online SEC enforcement efforts have paved the way for legitimate technological innovations to flourish, rendering markets more efficient and transparent. This allows investors more opportunities for success.
Stark concluded that labeling SEC enforcement actions as “regulation by enforcement” is a bogus big crypto catch phrase. He states that the SEC’s adaptability and enforcement efforts are a hallmark of the agency, allowing it to combat fraud and pave the way for legitimate technological innovations to flourish. Courts have also upheld a broad array of SEC cases involving crypto-related offerings, which further proves the effectiveness of SEC regulations.