SEC Chairman Seeks Tools, Expertise, and Resources to Regulate Crypto

SEC Chairman Seeks Tools, Expertise, and Resources to Regulate Crypto

The US Securities and Exchange Commission (SEC) Chairman, Gary Gensler, said in a congressional hearing that the securities regulator "requires new tools, expertise, and resources" to combat the misconduct in the crypto space. "We’ve seen the Wild West of the crypto markets, rife with non-compliance, where investors have put hard-earned assets at risk in a highly speculative asset class," he explained.

SEC Fiscal Year (FY) 2024 Budget Request

The US Securities and Exchange Commission (SEC) chairman, Gary Gensler, placed the Fiscal Year (FY) 2024 budget request before the House Appropriations Subcommittee on Financial Service and General Government on Wednesday.

"I am pleased to support the President’s FY 2024 request of USD 2.436 billion for the SEC, to put us on a better track for the future," Gensler said. "The FY 2024 request seeks funding for an additional 170 positions as well as full-year funding for those staff hired in FY 2023."

Commenting on the regulation of crypto assets, the SEC chief told the subcommittee, "We’ve seen the Wild West of the crypto markets, rife with non-compliance, where investors have put hard-earned assets at risk in a highly speculative asset class." He explained:

"Rapid technological innovation in the financial markets has led to misconduct in emerging and new areas, not least in the crypto space. Addressing this requires new tools, expertise, and resources."

The SEC chairman added that the additional staff will provide the SEC’s Enforcement Division "with more capacity to meet these challenges, investigate misconduct on a larger scale, and accelerate the pace of enforcement investigations to resolution."

SEC Very Active in the Crypto Space

Gensler detailed that the securities watchdog received more than 35,000 separate tips, complaints, and referrals from whistleblowers and others in FY 2022. He highlighted that even with limited resources, the Enforcement Division implemented more than 750 enforcement actions in FY 2022, a 9% increase over the previous year. "Our actions resulted in orders for USD 6.4 billion in penalties and disgorgement," the SEC chairman concluded.

The SEC has been very active in the crypto space. The regulator sent Coinbase a "Wells notice" on potential violations of securities law by the crypto exchange last week. The regulator also charged Tron founder Justin Sun for market manipulation and offering unregistered securities. In addition, the SEC recently initiated action against crypto exchange Kraken and stablecoin BUSD issuer Paxos.

What is your take on SEC Chairman Gary Gensler seeking "new tools, expertise, and resources" to regulate the crypto sector? Please post your comments.