John Reed Stark emphasizes the need for Crypto to conform to laws, not the reverse

John Reed Stark, a former official of the Securities and Exchange Commission (SEC), has alleged that the cryptocurrency industry is spreading falsehoods to conceal its lack of transparency and accountability. He dismissed claims that the SEC engages in “regulation by enforcement” and argued that the industry should adhere to established laws instead of expecting the legal framework to adapt to its needs. Stark made these remarks during a U.S. House Financial Services Committee hearing on May 7. He further questioned how investors can accurately evaluate digital assets in the absence of essential financial data. The term “regulation by enforcement” is often used within the crypto industry to criticize the SEC’s enforcement practices. The industry argues that the SEC should develop clear regulations through formal legislation or rulemaking processes instead of relying on enforcement actions to establish regulatory precedents. The hearing primarily focused on examining and improving the SEC’s enforcement practices, with severe criticism directed at the agency’s approach and its impact on businesses and individuals. Nick Morgan, founder of the Investor Choice Advocates Network, accused the SEC of pursuing litigation on a case-by-case basis and disregarding adverse rulings in certain jurisdictions to obtain more favorable outcomes in others.