John Reed Stark, a former chief of the U.S. Securities and Exchange Commission's (SEC) Office of Internet Enforcement, said that because cryptocurrency has become a partisan issue, he believes that if a Republican wins the 2024 presidential election, a Republican-led SEC could support more crypto-friendly regulations than the current SEC. He predicted that a Republican-led SEC would focus mainly on instances of fraud, rather than registration violations.

"Given the partisan divide that has evolved regarding crypto, especially at the SEC, my take is that should a Republican get elected U.S. president in 2024, the slate of Republicans appointed to the SEC will likely: 1. Decrease significantly the SEC’s crypto-enforcement efforts, probably filing mostly fraud cases, shifting efforts away from charging pure registration violations (such as the failure of a crypto-trading platform to register as an exchange, broker-dealer and clearing firm); 2. Become far more receptive to approving a bitcoin spot ETF and far more likely to take other significant crypto-friendly regulatory actions," Stark tweeted on the X platform. "If Hester Peirce becomes acting chair of the SEC, given her lengthy track record of dissent and opposition to most crypto-related SEC actions, the world should expect that most U.S. SEC crypto-related enforcement and most crypto-related SEC disruption would grind to a screeching halt."

Stark's comments came in the context of discussions surrounding recent applications filed with the SEC for bitcoin spot exchange-traded funds (ETF). Stark predicted that the SEC will not approve the applications, then said in a post on X, "However, I also believe that the crypto-regulatory tides could shift exponentially after Election Day."

The former SEC official noted that when he "first began writing about crypto in 2017, crypto was not at all a partisan issue," highlighting the fact that former President Donald Trump and former presidential candidate Hillary Clinton held similar views on the topic, "i.e. that crypto was a dangerous and horrific plague." Stark also pointed out that "the SEC’s crypto-crackdown began under Republican-appointed SEC Chair Jay Clayton. Clayton served as a fierce and relentless crypto critic and boasts a hefty multi-year track record of anti-crypto speeches and Congressional testimony, while also spearheading a broad range of groundbreaking crypto-related enforcement actions and aggressive/comprehensive SEC crypto-related regulatory pronouncements."

Stark then outlined the typical process at the SEC in which the chair resigns when a new president is elected, and the new president confirms a new SEC chair several months after the inauguration.

"Hence, should a Republican get elected president, Chair Gensler would likely resign and the senior Republican appointed SEC commissioner (in this case famed 'crypto-mom' @HesterPeirce) would possibly become acting chair," Stark said. "In addition, given that there would now be an equal number of Republicans and Democrats on the Commission, any votes by the Commission, especially relating to crypto-recommendations from the staff, could easily split at 2-2, because there would be at least one vacancy on the commission."

The SEC has recently targeted multiple crypto exchanges for registration violations, including Binance, the largest exchange in the world, and Coinbase, the largest exchange in the U.S., Federal Newswire previously reported.

Coinbase recently filed a memo asking the Court to dismiss the SEC's claims on the grounds that the "subject matter" of the lawsuit "falls outside the agency’s delegated authority," according to a copy of the memo shared on X by the company's chief legal counsel. The memo's preliminary statement asserts that the SEC and its chair, Gary Gensler, "wanted to get the jump" on regulating the digital asset industry despite the absence of a "legislative mandate" from Congress to do so. "Now, without any intervening legislative act, the Commission accuses Coinbase—the largest U.S. crypto exchange—of having 'defied' the federal securities laws in failing to register as a securities exchange, broker and clearing agency since 2019," the memo states. "No matter that the SEC allowed Coinbase to go public in 2021 with the same business it operates now. No matter that Congress has for years been actively considering—and just last week advancing—legislation to grant and allocate among other regulatory agencies the very authority the SEC now claims for itself."

Binance CEO and founder Changpeng Zhao (CZ) responded to the SEC's complaint with a blog post highlighting the lack of legal clarity put forward by the SEC for crypto companies in the U.S. "Unfortunately, the SEC’s refusal to productively engage with us is just another example of the Commission’s misguided and conscious refusal to provide much-needed clarity and guidance to the digital asset industry," the blog post said. "Today’s action is another in a line of examples where, as with other crypto projects facing similar suits, the Commission has determined to regulate with the blunt weapons of enforcement and litigation rather than the thoughtful, nuanced approach demanded by this dynamic and complex technology."