In a bid to tackle misconduct and noncompliance in the rapidly evolving crypto markets, US SEC Chair Gary Gensler has requested additional tools, expertise, and resources in the regulator’s 2024 budget proposal.
During the Subcommittee on Financial Services and General Government hearing with the U.S. Senate Appropriations Committee on July 19, Gensler threw his support behind the Biden administration’s request to allocate over $2.4 billion to the SEC for the 2024 fiscal year. He pointed out the rampant noncompliance and chaos in the “Wild West of the crypto markets” as primary reasons behind the budgetary request.
The advent of new technologies such as electronic trading, artificial intelligence, and predictive data analytics has revolutionized markets and business models. While the growth of crypto markets has been remarkable, it has brought along significant risks due to noncompliance and speculation. To combat this, the SEC must expand its capabilities with the increasing complexity of capital markets.
The budget proposal for FY 2024, amounting to $2.436 billion, primarily focuses on maintaining staffing levels and supporting real estate projects. To expand the team, the SEC plans to add 170 positions, resulting in a total staff count of 5,303 individuals.
Chair Gensler emphasizes the criticality of evaluating compliance and enforcement measures to boost market trust. By combating fraud and abuse, the SEC reduces system risk while safeguarding investors and lowering capital expenses. Such efforts benefit the overall economy substantially.
Division of Enforcement: Combatting Crypto Misconduct
The SEC’s Division of Enforcement, despite facing limited resources, managed to bring more than 750 enforcement actions in FY 2022, marking a 9% increase over the previous year.
These actions resulted in orders amounting to $6.4 billion in penalties and disgorgement. However, Gensler acknowledged the need for new tools, expertise, and resources to address misconduct in the emerging crypto space.
Similarly, the Division of Examinations, responsible for ensuring firms’ compliance with the law, faces challenges due to the rapid growth of investment advisers and private funds. The budget request for FY 2024 aims to provide the Division with more resources to tackle these market challenges effectively.
Other programmatic Divisions, including Corporation Finance, Investment Management, and Trading and Markets, are also set to receive funding to keep pace with the evolving markets and to protect American families from risks in the crypto markets.
Nevertheless, Chair Gensler stressed the importance of not taking the SEC’s leadership in capital markets for granted. The 2024 budget request aims to equip the agency with the necessary resources to protect the American public and maintain the integrity of the financial markets.
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