John Reed Stark, former head of the US Securities and Exchange Commission’s (SEC) Office of Internet Enforcement, has declared an “unprecedented financial regulatory attack” against the cryptocurrency space in the United States.
On August 10, Stark moved to the X social media platform make these claims Based on the cryptocurrency-related policies put in place by some US financial regulators in the past few years.
The former SEC chairman talks about the new Fed program
First, John Reed Stark begins his case by highlighting the “New Activities Oversight Program” recently introduced by the US Federal Reserve (Fed) on August 8.
According to the former SEC chairman, part of this programme It aims to regulate the participation of US banks in dollar-backed tokens such as the recently launched PaypalUSD or other stablecoins.
Under the new federal directive, banks intending to issue, hold or trade dollar-backed tokens must obtain a written supervisory letter of no-objection from the US lead bank after demonstrating that they can handle these assets in a “safe and proper manner.”
However, John Reed Stark stated that this will be a “difficult” task for most traditional banks as the Fed judges their ability to manage the many risks associated with these dollar-backed tokens. These risks include money laundering, client management, and hacking.
Moving forward, Stark pointed to an “aggressive” crypto regulatory policy by another traditional regulator – the Federal Deposit Insurance Corporation (FDIC).
The former SEC chief noted in April 2022 that the FDIC wrote a Financial Institution Letter (FIL) To all FDIC regulated banks require them to inform the company before transacting any cryptocurrency related activity.
After such notification, the FDIC will examine the potential effects of these activities with regard to consumer protection and overall financial stability before granting an appropriate supervisory response.
According to John Reed Stark, cryptocurrency users in the US should consider the aforementioned FIL as “pioneering” the FDIC’s tight supervision of all bank-related crypto transactions.
Finally, Stark is drawing attention to another similar matter by the US Office of the Comptroller of the Currency (OCC).
The former head of the Securities and Exchange Commission states that OCC Explanatory Letter No. 1179 All national banks and federal savings associations seeking to engage in cryptocurrency-related activities are required to show evidence of an “appropriate oversight regime.”
However, Stark believes that the lack of an “overarching framework” in the United States makes this task quite “baffling”. Therefore, OCC Message #1179 could represent a “harbinger” of a larger OCC vision to significantly restrict national banks’ involvement in cryptocurrency.
Related reading: Ripple Vs. SEC: Does Appeal Letter Endanger XRP? Lawyers do not agree
US regulators are turning their attention to other digital asset sectors
In his concluding remarks on the growing regulatory pressure on the digital currency space in the United States, John Reed Stark noted that financial regulators in the United States have begun to extend their oversight beyond cryptocurrencies and other aspects of the digital asset economy.
The former SEC commissioner highlighted the ongoing case the SEC has brought against Coinbase, Binance, and other cryptocurrency exchanges in support of his case, which potentially threatens the sovereignty of the decentralized financial (DeFi) system.
In addition, Stark also mentioned the use of non-fungible tokens as a target regulatory site NFT related trials It is already led by the US Department of Justice.
John Reed Stark believes there is an “unprecedented cryptocurrency regulatory firestorm” It continues to inflate exponentially, and all cryptocurrency users in the US should be “well aware.”
Total crypto market cap valued at $1.136 trillion on the hourly chart | Source: TOTAL chart on Tradingview.com
Featured image by Freepik, chart from Tradingview