Tech behemoth Mark Cuban and former Securities and Exchange Commission (SEC) official John Reed Stark engaged in a heated exchange over the ongoing regulatory crackdown on the crypto industry.
The discussion was sparked by the recent temporary restraining order (TRO) hearing against Binance, which sought to freeze all of the exchange’s U.S. assets.
Cuban And Stark Clash Over Judge’s Remarks In Binance Case
Cuban argued that not all crypto businesses with tokens or considering using tokens are large “enterprises,” as Stark had assumed. He pointed out that most crypto applications are small, with only a few people involved.
He also shared his experience of a small company that had called the SEC for guidance on getting registered. The response they received was to review some cases and get a lawyer to help them.
Cuban sees this as the fundamental problem, as small start-ups are being thrown under the bus by the SEC and Gary Gensler, the current SEC Chairman. He believes they are being asked to find and pay a securities lawyer that knows how to deal with crypto to launch their application/token.
According to Cuban, this is wrong in every way, as it is the crypto equivalent of cities enforcing all the licensing laws on a “lemonade stand”.
On the other hand, Stark sees the SEC’s actions as necessary, as the industry is still largely unregulated. He argues that the SEC is “trying to protect investors” from potential fraud and scams in the industry. He also believes that the SEC’s actions will ultimately help the industry by weeding out bad actors and promoting transparency.
The debate between Cuban and Stark then turned to the utility of tokens and the regulation of the digital space. Stark argued that tokens could not be treated like pink sheets or stocks and that the industry fails as an investment, currency, store of value, marketplace, and revolutionary equalizer for the unbanked.
On the other hand, Cuban urged Stark to put aside partisanship and view the issue objectively. He suggested that tokens could be treated like other securities and that the SEC should propose guidelines for them.
Cuban Draws Parallels Between Early Internet And Crypto
Mark Cuban drew parallels between the internet’s early days and the crypto industry’s current state. Despite facing criticism and skepticism, Cuban believes that the winners in the crypto industry will be game changers, just as the successful companies in the early days of the internet were.
However, Cuban acknowledges that 90% percent of blockchain companies and 99% percent of tokens will go broke, but he believes that the utility of smart contracts is valid. He suggests that the SEC should find ways to enable startups to find funding and support while protecting investors.
According to Cuban, Congress should modify the exemptions available to this technology so that registration is obvious and the path for exchanges is doable in a way that protects investors and enables the industry to grow.
Cuban also argues that while there are valid criticisms of the crypto industry, they do not invalidate the impact the industry can have on the economy. He suggests that Crypto Derangement Syndrome, which refers to an irrational fear or hatred of cryptocurrency, is just as big a problem as overhyping the potential of crypto.
Featured image from Unsplash, chart from TradingView.com