The future of crypto enforcement in the United States may be completely altered depending on the outcome of the 2024 presidential election, as former SEC official John Reed Stark suggests. In a tweet on August 13, Stark, who served as the Chief of the SEC Office of Internet Enforcement, predicted that if a Republican President were elected, there could be a significant shift in the regulatory approach towards cryptocurrency, including the potential resignation of SEC chief Gary Gensler.
Currently, there are several Republican candidates vying for the presidency. According to recent polls, former President Donald Trump remains the most popular candidate among Republican voters, followed by Florida Governor Ron DeSantis and South Carolina Senator Tim Scott. If a Republican candidate were to win, Stark speculates that Gensler would likely be replaced by Hester Peirce, a well-known advocate for crypto and often referred to as “Crypto Mom.”
Peirce, who has a history of dissent and opposition to many of the SEC’s crypto-related enforcement actions, would likely bring about a significant slowdown in crypto-related SEC enforcement, according to Stark. This would represent a dramatic shift in the regulatory landscape, especially considering the current emphasis on enforcement and oversight by the SEC.
Stark also highlighted the increasing polarization of crypto regulation within the SEC and U.S. politics as a whole. When he first started writing about crypto in 2017, politicians from both parties held similar views on the matter. However, today, the issue of crypto has become highly divisive. Republican candidate Ron DeSantis, for example, has expressed plans to protect Bitcoin (BTC) and vowed to ban central bank digital currencies (CBDCs) if elected President. On the other hand, Democratic Senator Elizabeth Warren has made numerous efforts to crack down on all forms of crypto, even forming an “anti-crypto army” as part of her Senate re-election campaign.
Until a Republican president takes office, Stark believes that the SEC’s stance towards crypto is unlikely to become more favorable. He predicts that the SEC will reject the current wave of spot Bitcoin exchange-traded fund (ETF) applications for various compelling reasons. Stark points to an Aug. 8 letter from Better Markets, a public interest advocacy organization, which highlights issues such as artificially inflated trading volumes and concerns about market manipulation.
Despite applications from industry giants like BlackRock and Fidelity for spot Bitcoin ETF products, Stark believes that the SEC will eventually reject all outstanding filings. This suggests that, for the time being, crypto regulation in the United States will continue to face significant challenges.
The outcome of the 2024 presidential election will likely have a profound impact on the future of crypto regulation in the United States. A Republican victory could bring about a shift in the SEC’s approach, potentially leading to a slowdown in enforcement actions and a more crypto-friendly environment. However, until then, the SEC is expected to maintain its strict stance on crypto and reject spot Bitcoin ETF applications due to concerns over market manipulation and other issues.