SEC Chairman Gary Gensler has called for a significant increase in the agency’s budget to tackle the “wild west” environment of the crypto industry. Speaking before the U.S. Senate Committee on Appropriations, Gensler highlighted the prevalence of non-compliance in crypto markets and stressed the need for increased resources to protect investors from adverse market participants.
Gensler emphasized that the rapid growth and constant evolution of the crypto industry have created a breeding ground for wrongdoing. As the regulatory authority responsible for maintaining order in the markets, the SEC must be adequately prepared to tackle bad actors. Therefore, he argued that it is necessary for the SEC to expand its workforce by hiring dozens of additional full-time staff.
In the fiscal year 2022, the SEC’s enforcement division has already taken 750 actions, resulting in the collection of $6.4 billion in penalties and disgorgement. Notably, a significant portion of these enforcement actions have targeted crypto firms. This approach has earned the SEC a reputation for utilizing a “regulation by enforcement” strategy.
While some U.S. lawmakers have expressed concerns about this enforcement-centric approach, suggesting that a legislative framework would be more effective in regulating the industry, Gensler defended the SEC’s strategy. He explained that the SEC has been using enforcement actions to communicate with the market since the 1960s, asserting that it served as a deterrent and a means to punish wrongdoers after the damage had already been done.
However, two members of the U.S. House of Representatives, Reps. French Hill and Dusty Johnson, have urged the SEC to adopt a more legislation-focused approach. In a letter to Gensler, they proposed the establishment of a statutory framework that would provide clear guidelines for firms operating in the crypto industry, ensuring compliance with consumer protection standards.
SEC Chairman Gary Gensler is seeking additional funding to address the challenges posed by the crypto industry. With the “wild west” nature of crypto markets and rampant non-compliance, Gensler argues that the SEC needs to expand its workforce to effectively protect investors against bad actors. While the SEC has faced criticism for its enforcement-centric approach, Gensler defended its effectiveness in deterring and punishing wrongdoing. However, some lawmakers are advocating for a legislative framework to establish clear guidelines for the industry. Ultimately, the SEC’s request for increased funding reflects the agency’s commitment to maintaining the integrity of the capital markets in the face of the evolving crypto landscape.
