SEC Chairman Gary Gensler cites crypto’s ‘Wild West’ over agency budget increase

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On Wednesday, Securities and Exchange Commission (SEC) Chairman Gary Gensler requested tens of millions of dollars in additional funding for his agency’s multi-billion budget before the US Senate Appropriations Committee, telling lawmakers that the agency needed to expand, among other things. , protecting investors from a crypto industry plagued by non-compliance.

We’ve seen the Wild West of crypto markets, plagued by non-compliance, where investors put hard-earned assets in a highly speculative asset class at risk, Gensler said in his prepared remarks.

With funding commensurate with our mission, we can be an even stronger advocate for U.S. public investors and issuers, he said.

The SEC, which has undertaken extensive efforts to crack down on crypto crimes, is seeking an additional $72 million to add dozens more full-time staff to its roster, Gensler said. A bipartisan bill the committee approved last week to fund the SEC $2.364 billion for fiscal year 2024 is just enough to sustain currently allowed staffing levels given inflation, the chairman argued.

The SEC employed 4,685 people in 2023, about half of whom focused on enforcement and review duties, according to data Gensler shared in his remarks. The additional funding would help the agency add 170 positions to its teams, in addition to providing full-year funding for staff members hired in 2023, potentially bringing the SEC’s total full-time equivalent to 5,139 employees.

With funding commensurate with our mission, we can be an even stronger advocate for U.S. public investors and issuers, Gensler said. Eliminating fraud, manipulation and abuse reduces risk in the system.

Questions from lawmakers during the hearing signaled a range of attitudes toward crypto and the SEC’s approach to regulating it.

Sen. John Kennedy (R-La.) asked Gensler why the SEC didn’t nip the alleged fraud in the failed crypto exchange FTX in the bud.

“So [former FTX CEO Sam Bankman-Fried] who did everything except buy Mount Rushmore and you weren’t curious where these guys were getting that money? Kennedy asked. Where was the SEC? (Gensler noted that FTX is headquartered in the Bahamas and taking enforcement action takes time.)

Sen. Richard Durbin (D-IL) seemed suspicious of crypto in general and asked Gensler if the SEC had enough funds to police the industry.

At the other end of the spectrum, Sen. Bill Hagerty (R-TN) laid out metrics that may be familiar to CoinDesk readers, but not the mainstream stablecoin market share, number of blockchain developers blocs in the United States to underscore his concern that the SEC’s “regulation by enforcement” and unclear rules are pushing business and innovation overseas.

UPDATE (July 19, 21:35 UTC): Added a section detailing questions from lawmakers.

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