SEC's Stark Opposes Crypto Regulation Reform, Calls for Strict Adherence to Existing Laws

On March 21, the U.S. Securities and Exchange Commission (SEC) held its first cryptocurrency industry roundtable, gathering industry attorneys, officials, and former regulators to discuss the regulatory framework for digital assets. Among the participants was John Reed Stark, the former director of the Office of Internet Enforcement at the SEC, who is known for his strong opposition to cryptocurrencies. Stark used this platform to express his firm stance against regulatory reform for digital assets.

Stark argued that the Securities Act of 1933 and 1934 should not be amended to accommodate digital assets. He emphasized that these assets should continue to be classified as securities under current laws. Stark asserted that individuals purchasing cryptocurrencies are primarily investors, not collectors, and highlighted the SEC's mission to protect these investors. He stated, "The people buying crypto are not collectors. We all know that they are investors, and the mission of the SEC is to protect investors."

Stark also criticized the digital asset industry for its lack of transparency and accountability. He noted that the volume of case law has developed rapidly due to the actions of crypto firms, which have employed top law firms to challenge the SEC. Despite these efforts, Stark claimed that these firms have lost almost every case. He concluded that he saw no innovation in digital assets or cryptocurrencies compared to previous online revolutions, such as the debut of the iPhone.

Stark's anti-crypto stance has been a contentious issue within the industry. In February 2024, he characterized a sponsorship deal between the Dallas Mavericks and crypto firm Voyager as an agreement with a "heroin manufacturing firm." Stark later supported the SEC's regulation by enforcement under former chairman Gary Gensler, stating that cryptocurrency must conform to existing laws rather than the law evolving to embrace the future of money.

Stark's views have been met with criticism from industry executives and investors. In June 2023, notable investor Mark Cuban called out Stark's views as "crypto derangement syndrome." Despite the criticism, Stark remains a vocal opponent of cryptocurrencies and the digital asset industry, advocating for strict adherence to existing regulations.