On Wednesday, John Reed Stark, a former chief of the SEC Office of Internet Enforcement, took to X to urge all investors to steer clear of any investments in the cryptoverse. Stark elaborated about the “high risks” associated with unregulated crypto trading platforms. The post also raised concerns about Morgan Stanley’s endorsement of cryptocurrency as a reliable asset class that will deliver intended returns to investors. Starting this week, nearly 15,000 Morgan Stanley advisors have reportedly proceeded to push shares of two spot bitcoin exchange-traded funds (ETFs) to select clients.
IMHO, Any Of The 15,000 Morgan Stanley Investment Advisors Who Are Also Certified Financial Planners (CFPs) May Lose Their CFP Credential (Quickly)@MorganStanley is today apparently unleashing its legion of approximately 15,000 financial advisors to pitch shares in BlackRock’s… pic.twitter.com/3NL4zzKxti
— John Reed Stark (@JohnReedStark) August 7, 2024
Stark’s primary concern with crypto trading platforms centers around the lack of regulatory safeguards and the “very real threat” of fraud and misconduct against retail and novice investors. The former SEC official states the lack of a “U.S. governmental team of objective auditors and examiners to inspect and scrutinize the fairness, execution and transparency of transactions” puts investors at a greater risk against security breaches that are common to the crypto space. Decentralization is one of the fundamentals of cryptocurrency and blockchain technology in general. A concept that eliminates the bureaucracy of traditional financial structures. When there is “no obligation to design ethics and compliance codes for Wall Street entities” who trade and promote a highly volatile asset class such as cryptocurrency, then the possibility of theft becomes glaringly obvious.
John Reed Stark’s critical take on crypto is not the first of its kind. Even former president Donald Trump ridiculed cryptocurrency as being governed by “thin air” before becoming its loudest spokesperson in the 2024 presidential election. As the founder of the cybersecurity firm, John Reed Stark Consulting, Reed’s observations echo the Certified Financial Planners (CFP) Board’s recent update on Sanction Guidelines, Fitness Standards, and Procedural Rules. The update emphasizes that all CFPs must clearly state the potential risks associated with crypto investments. Failing to do so can lead to CFPs losing their credentials altogether. Stark urges Morgan Stanley advisors to simply “say no” to crypto instead of “take the get-rich-quick-bait” and risk their careers.
