SEC Chairman Gary Gensler has called on the U.S. Senate Committee on Appropriations for a significant budget increase to fortify investor protection in the turbulent cryptocurrency markets. Amid a wave of noncompliance issues within the crypto industry, Gensler firmly advocates for an expanded agency presence.
Funding the future of crypto regulation
Describing the current state of the crypto markets as a “Wild West,” riddled with “fraud, scams, and abuse,” Gensler highlights the need for stringent oversight. He proposes an additional $72 million in funding to bolster the agency’s workforce. As of 2023, the SEC maintains a team of 4,685 individuals, nearly half dedicated to enforcement and examination tasks.
The proposed funding is poised to open up 170 new positions and secure full-year funding for staff recruited in 2023, potentially bringing the SEC’s total number of full-time employees to 5,139. This request for increased funding follows the committee’s recent approval of a bipartisan bill earmarking $2.364 billion for the SEC for the fiscal year 2024. Gensler maintains, however, that the approved funding merely sustains existing staffing levels, given inflation.
Grilled by the committee
During the hearing, Gensler fielded a series of challenging questions concerning the SEC’s actions—or lack thereof—in preventing crypto fraud. Senator John Kennedy (R-La.) inquired as to why the SEC didn’t preemptively address the alleged fraudulent activities at FTX, a crypto exchange.
Moreover, lawmakers showed diverse attitudes toward the SEC’s approach to crypto regulation. Some, like Senator Richard Durbin (D-IL), questioned whether the SEC had sufficient funds to regulate the industry effectively. On the other hand, Senator Bill Hagerty (R-TN) expressed concerns that unclear rules and “regulation by enforcement” could potentially drive innovation offshore.
In his closing remarks, Gensler reasserted that with the funding to match their mission’s scale, the SEC could advocate more powerfully for both the American public and issuers. By stamping out fraud and manipulation, the agency can reduce system risk, creating a safer space for the public and industry.
