The SEC has been a major player in the cryptocurrency industry and has often been perceived as having a confrontational approach to the sector. Recently, the agency Chairman Gary Gensler made a case for an extra $72 million in funding to enhance investor protection in the crypto markets. In a testimony before the U.S. Senate Committee on Appropriations, Gensler stressed that the agency needs to grow in order to tackle noncompliance problems within the crypto industry effectively. He took the opportunity to strongly criticize the industry, highlighting its prevalence of “fraud, scams, and abuse.”
“We have witnessed a chaotic situation in the crypto markets, characterized by widespread noncompliance, wherein investors have exposed their hard-earned assets to significant risks in a highly speculative asset class. With the necessary funding to fulfill our mission effectively, we can become a more robust advocate for the American public, safeguarding the interests of both investors and issuers alike.”
However, during the hearing, Gensler faced a barrage of questions related to the collapse of the crypto exchange. Senator John Kennedy [R-La.] pressed Gensler about the SEC’s lack of preventive action in addressing the alleged fraud at FTX. He questioned why the agency did not show curiosity about the origin of the funds used by [SBF], who seemingly engaged in extravagant spending, and raised concerns about the agency’s involvement in such matters.
SEC Ponders Organizational Growth
According to Gensler, the SEC is currently seeking additional funding of $72 million to hire several full-time staff members. As of 2023, the agency had a workforce of 4,685 individuals, with almost half of them dedicated to enforcement and examination tasks. With the proposed funding, the SEC aims to create 170 new positions and secure full-year funding for the staff hired in 2023. This move could potentially increase the total number of full-time employees at the agency to 5,139.
This request for funding follows the recent approval of a bipartisan bill by the committee, allocating $2.364 billion for the SEC in fiscal year 2024. Gensler argued that this funding would only cover the existing authorized staffing levels, accounting for inflation. The SEC Chair emphasized that with adequate funding, they can significantly enhance their ability to serve as a stronger advocate for the American public, protecting the interests of both investors and issuers. Additionally, Gensler highlighted that combatting fraud, manipulation, and abuse within the system would reduce overall risk.