Ladan Stewart, a partner at White & Case LLP, previously worked at the US Securities and Exchange Commission’s Division of Enforcement, where she led the specialized crypto trial unit. The SEC’s approach to the crypto industry is focused on investor protection, ensuring disclosures are clear and investors are aware of potential risks. Stewart emphasized that the SEC is technology-neutral and not actively trying to drive crypto projects out of the US.
Stewart highlighted her work with Chair Gary Gensler, who is actively involved and knowledgeable about crypto issues. Since transitioning to the private sector, Stewart has been helping players in the crypto industry navigate regulatory challenges. She expressed a desire to improve engagement between the industry and the SEC to find ways to comply with existing laws.
The SEC’s enforcement strategy has evolved from targeting token issuers like Ripple and Telegram to focusing on intermediaries like exchanges such as Coinbase. Stewart explained that this shift is a natural progression to address potential conflicts of interest in the industry. She also discussed the agency’s response to high-profile cases like FTX, emphasizing the swift and serious investigation undertaken by multiple agencies.
Regarding decentralized finance (DeFi), Stewart noted that it may be the next frontier for the SEC’s enforcement focus. She emphasized the importance of determining whether projects claiming to be decentralized are truly autonomous and decentralized. She explained that the SEC’s approach to DeFi and DAOs is to analyze the economic structure and determine if investors are relying on the efforts of others.
Stewart discussed compliance options for token issuers under securities laws, mentioning past approaches like Reg A offerings. She emphasized the challenge of scalability in regulatory compliance due to the fact-intensive nature of Howey analysis. Stewart also addressed the SEC’s enforcement strategy in terms of timing and prioritization of investigations, noting that resource constraints can impact the agency’s ability to pursue cases simultaneously.
In conclusion, Stewart expressed cautious optimism about the future of the crypto industry, highlighting key areas of potential regulatory focus such as stablecoins and memecoins. She emphasized the importance of addressing fraud and manipulation while supporting the growth and legitimacy of the industry. Stewart also indicated that while NFTs may not currently be a priority for SEC enforcement, cases involving fraud or manipulation could warrant further attention.
