The landscape of crypto enforcement in the United States could witness a complete turnaround, contingent on the outcome of the crucial 2024 election, as revealed by former SEC official John Reed Stark. Stark, in an insightful tweet on August 13, outlined a possible scenario where a Republican President’s victory could dramatically shift the crypto-regulatory trajectory, possibly leading to the departure of SEC chief Gary Gensler.
Within the Republican contenders, the frontrunner is the former President, Donald Trump, followed by Florida Governor Ron de Santis and South Carolina Senator Tim Scott. Stark postulates that if a Republican takes the presidency, crypto advocate Hester Peirce, often referred to as “Crypto Mom,” could succeed Gensler at the SEC.
Peirce’s history of dissent against the regulator’s crypto-related enforcement is well-known. Stark emphasized that if she assumes the leadership role at the SEC, most crypto-related enforcement actions and disruptions by the agency could come to a halt. He further pointed to the escalating polarization of crypto regulation within both the SEC and broader U.S. politics.
Back in 2017, when Stark began writing about crypto, a consensus existed among politicians including then-President Donald Trump, Secretary Hillary Clinton, and Congresswoman Maxine Waters, who viewed crypto as a “dangerous and horrific plague.” However, today, crypto has become a deeply divisive issue.
Republican candidate Ron de Santis has pledged to safeguard Bitcoin and vowed to ban central bank digital currencies (CBDCs) if elected. Conversely, Democratic Senator Elizabeth Warren has launched a concerted effort to curb all forms of crypto, even forming an “anti-crypto army” as part of her Senate re-election campaign.
Stark anticipates that until a Republican administration takes the reins, the SEC’s stance on crypto is unlikely to soften. He predicts that the regulator will decline the current wave of spot Bitcoin ETF applications, citing “compelling” reasons.
Referring to an August 8 comment letter from Better Markets to the SEC, Stark pointed out that spot Bitcoin markets have a history of inflated trading volumes, concentrated ownership, and dependence on select entities for network maintenance. This susceptibility to manipulation by malicious actors leaves investors highly exposed.
Despite heavyweight players like BlackRock and Fidelity submitting applications for spot Bitcoin ETFs, Stark remains convinced that the SEC will ultimately dismiss all pending filings. In essence, the upcoming 2024 election holds the potential to shape the future of crypto regulation, with the outcome potentially steering the SEC’s enforcement course and deciding the fate of crypto-friendly policies.
