Ex-SEC Chief Claims Agency Overreaches Authority on Crypto Rules

Key Takeaways

• SEC Chair Atkins proposed a crypto deregulation plan to foster U.S. innovation after the CLARITY Act failed.
• Ex-SEC official John Reed Stark slammed the rule as illegal, arguing it lets issuers wrongly self-certify.
• Stark warned the proposal usurps Congress, threatening a major legal challenge against the SEC.

Reed Stark Claims SEC Usurps Congressional Authority On Crypto Rulemaking

After the CLARITY Act failed to pass cloture on Tuesday over several issues, the Securities and Exchange Commission (SEC) has vowed to step in to provide much-needed clarity to the industry.

In August, SEC Chair Paul Atkins unveiled a package of exemptions known as Regulation Crypto Assets, designed to, in his own words, “facilitate capital formation and allow crypto asset innovation to flourish in the United States in the years ahead.”

Nonetheless, this deregulation plan has detractors. John Reed Stark, founder and former chief of the SEC’s Office of Internet Enforcement, with over 18 years in the agency, believes Atkins’ push to deregulate the crypto industry and open the ecosystem to mainstream investors is illegal and usurps Congressional authority.

Reed Stark stressed that Atkins’ plan “exceeds the SEC’s exemptive authority under Securities Act Section 28 and Exchange Act Section 36,” and that it disregards the agency’s own decades of litigated positions, contradicting its previous actions.