Ladan Stewart, a partner at White & Case LLP, previously worked at the U.S. Securities and Exchange Commission in the Division of Enforcement for over eight years. In her role, she led the SEC’s specialized crypto trial unit, focusing on litigating enforcement matters such as SEC v. Ripple, SEC v. Telegram, SEC v. Bankman-Fried, and SEC v. Coinbase. Stewart emphasizes the importance of compliance within the crypto industry for the protection of investors.
During her time at the SEC, Stewart observed a genuine concern for investor protection and emphasized the agency’s focus on ensuring that investors receive the necessary disclosures before investing in risky assets. She dispelled the notion of a systematic plan to hinder the crypto industry within the U.S. government and highlighted the SEC’s technology-neutral approach. Stewart praised Chair Gensler’s involvement in the space and commended his grasp of the legal issues concerning crypto regulation.
Since transitioning to the private sector, Stewart has continued to advocate for the benefits of blockchain technology and its potential to enhance the financial system. She noted the challenges faced by industry players in navigating complex regulatory issues and expressed the need for improved engagement between the industry and regulatory agencies. Stewart also discussed the SEC’s enforcement strategy, including its shift from targeting token issuers to focusing on exchanges such as Coinbase.
Regarding decentralized finance (DeFi) and decentralized autonomous organizations (DAOs), Stewart stressed the importance of assessing their actual decentralization rather than relying on labels. She emphasized the SEC’s application of the Howey Test to determine whether a project qualifies as an investment contract. Stewart also discussed the scalability issues faced by issuers seeking to comply with securities laws and the limited uptake of no action relief letters as a compliance mechanism.
In response to inquiries about stablecoins, memecoins, and non-fungible tokens (NFTs), Stewart noted the SEC’s potential enforcement focus on stablecoin issuers engaging in misleading marketing practices and memecoins associated with fraud and manipulation. She expressed hope for a reduction in the hype surrounding memecoins to promote a healthier industry image. Stewart also highlighted the SEC’s limited attention to NFTs due to resource constraints and the prevalence of other enforcement priorities within the market.
Looking ahead, Stewart identified potential areas of interest for the SEC, such as continued scrutiny of stablecoin issuers and potential cases involving memecoins and NFTs linked to fraud or manipulation. She stressed the importance of maintaining a balanced approach to regulation to foster a more secure and stable environment for the evolving crypto and blockchain industry.
