- John Reed Stark, former SEC official, said the NFT and crypto ecosystems are bound to fail.
- He noted that 95% of NFT collections have zero market capitalization, and prices average $5 – $10.
- Stark said crypto will fail because of a lack of regulatory oversight and consumer protection, among other issues.
Amidst sour market performances, former U.S. Securities and Exchange Commission (SEC) executive John Reed Stark said in a post on X (formerly Twitter) that NFTs will go down in history. He added that crypto is bound to face the same fate.
Stark said that 95% of digital collectibles are now worthless, less than two years after the market recorded a bull run. He continued that NFT prices, which once averaged thousands of dollars, now go for $5 – $10.
Furthermore, Stark said the majority of NFT collections have a market cap of zero. According to him, rampant market manipulation is one of the foremost problems with the NFT ecosystem. “Fraud is not only rewarded but also taught,” he said.
Stark said many venture capitalists and Wall Street profiteers made lots of money pitching NFTs to their customers. He continued that the sellers often drew buyers by promising dreams of financial inclusion, decentralization, and instantaneous wealth.
The former SEC official shared the same view on crypto, and not for the first time, saying tokens fail to qualify as an investment because of the absence of regulatory oversight, transparency, consumer protections, insurance, and licensure.
Referencing the collapse of many crypto firms such as FTX, Blockfi, and Celsius, Stark said consumers in the crypto space have no insurance against collapses and bankruptcies. When they happen, he noted that the customers often become unsecured creditors – losing all their funds.
Additionally, the former SEC official said crypto fails as a currency because taxes are too burdensome and prices are too volatile. He added that the high fees and technical inconvenience make the blockchain fall short of the disruptive technology tag.
Since the post, Stark has drawn several criticisms from the crypto community, inquiring as to why he would give so much attention, daily, to something he believes doesn’t matter.
On the other hand, some users agreed that parts of his statement reflect the reality of the ecosystem. However, they noted his bias, countering that there are already use cases for solving some of these issues.
Disclaimer: The information presented in this article is for informational and educational purposes only. The article does not constitute financial advice or advice of any kind. Coin Edition is not responsible for any losses incurred as a result of the utilization of content, products, or services mentioned. Readers are advised to exercise caution before taking any action related to the company.
