Crypto must adapt to the rules, not the other way around – John Reed Stark

Former Securities and Exchange Commission official John Reed Stark has dismissed claims that the agency operates within “mandatory regulations” and accused it of fabricating a myth to cover up a lack of transparency and accountability.

Stark's comments were made at a hearing of the US House Financial Services Committee on May 7. According to the SEC's former head of internet enforcement, the crypto industry has refused to abide by established rules while expecting the legal framework to bend to its needs.

“SEC Rule Expression in Implementation […] It falls squarely into that last category. Just a lie. […] Crypto activists represent the most important recent example of industry players the SEC unfairly controls over the markets. I have never seen such a well-funded, coordinated and baseless attack on the SEC and its mission.

According to Stark, the so-called “enforcement” in the crypto industry is just the regulator doing its job. “The rest of us simply call it law enforcement.”

“Digital assets typically have no cash flow, no product, no staff, no management, no accounting, no product, no service, no operating history, no revenue reports, no proven track record of adoption or use. […] How can any financial analyst, let alone an everyday investor, make an accurate assessment in such a limitless information gap?” Stark was asked during the session.

In the crypto industry, the term “regulation in enforcement” is often used to criticize how the SEC is enforcing rules and regulations. The industry contends that the SEC is setting regulatory precedent by taking enforcement actions rather than setting clear, formal rules through a formal rulemaking or rulemaking process.

“Make no mistake, the SEC is not perfect. There are SEC cases and SEC rules that I believe are unfair. […] The SEC has not gone rogue, but is simply doing its job. […] of [digital] The property industry needs to coordinate and adapt to the rules, not the other way around.

The hearing focused on scrutinizing and improving the commission's enforcement practices, drawing heavy criticism of the agency's approach and its impact on businesses and individuals.

During the hearing, Nick Morgan, founder of the Investor Choice Advocates Network, accused the SEC of setting up a “trial on one issue,” referring to cases in which the commission is “free to ignore adverse decisions in some jurisdictions in order to seek more favorable outcomes in other jurisdictions.” Morgan continued:

“Among many problems, the SEC's enforcement policy rules create legal uncertainty for ordinary people, including people not accused of fraud, who are forced to litigate policy issues every time even if a federal appeals court rules against the SEC. on a particular policy”.

Magazine: Legislators' fear and skepticism fuel proposed crypto regulations in the US.