John Reed Stark, former head of the SEC’s department for overseeing compliance with laws on the Internet, has said that the thesis that the regulator “controls the crypto industry through enforcement” is wrong, since that is how securities regulation works.
According to him:
“Prosecution and enforcement is how securities regulation works. The flexibility of the SEC’s ‘weapon’ is its hallmark in keeping fraud under control. The mantra [regulation by coercion] is complete nonsense, a misguided attempt to attract sympathetic libertarian minds.”
He has recalled that similar criticism of the SEC was made in 1998. Then they also pointed to the “vague” rules that form barriers to the growth of the industry.
He has explained:
“Looking back, the most egregious cases of early securities fraud on the Internet have been eliminated. In addition, the SEC’s vigorous enforcement efforts have paved the way for legitimate technological innovation to flourish by making markets more efficient and transparent. Investors have more opportunities for success.”