- Gary Gensler has said the SEC needs new tools, expertise, and resources to regulate the crypto industry.
- The US SEC chair notes the regulatory muscle will help expedite enforcement, investigations, and resolution.
- He was speaking during a Congressional hearing on budget request and crypto regulation.
US Securities and Exchange Commission (SEC) chair, Gary Gensler, has hinted at tough times ahead for crypto players. In his testimony before the House Appropriations Subcommittee on Financial Service and General Government, Gensler advocated for additional infrastructure, calling for new tools, expertise and resources to fight misconduct in the crypto arena.
We’ve seen the Wild West of the crypto markets, rife with noncompliance, where investors have put hard-earned assets at risk in a highly speculative asset class,
SEC chair calls crypto market the 'Wild Wild West'
Gensler was testifying on the SEC’s Fiscal Year (FY) 2024 budget request. An excerpt from his testimony reads:
I am pleased to support the President’s FY 2024 request of $2.436 billion for the SEC, to put us on a better track for the future,” Gensler began. “The FY 2024 request seeks funding for an additional 170 positions, as well as full-year funding for those staff hired in FY 2023.
Shifting attention from the budget, Gensler told the committee that the crypto market has become the “Wild Wild West” soiled with a lot of non-compliance as investors put their hard-earned assets at risk in a highly speculative asset class. In his opinion, rapid technological innovation within the financial market scene has paved way for misconduct in emerging and new areas beyond the crypto arena.
Capacity building in the agency
Accordingly, the SEC proposed the ideal remedy would be capacity building, which means the introduction of “new tools, expertise, and resources.”
Gensler also specified that part of these infrastructures would be additional staff, who would help the agency’s Enforcement Division.
With more capacity to meet these challenges, investigate misconduct on a larger scale, and accelerate the pace of enforcement investigations to resolution.
He disclosed that the agency received over 35,000 tips and complaints in FY 2022. Despite limited resources, the SEC’s Enforcement Division was able to bring to book over 750 enforcement actions in Fiscal Year 2022. Notably, this was a 9% increase from the previous fiscal year.
Our actions resulted in orders for $6.4 billion in penalties and disgorgement.
The SEC, led by Gensler, has increased its activity in the crypto arena, with the most recent action being a ‘Wells notice’ sent to Coinbase calling out the US-based exchange for potential violations of securities law.
The agency also went after Tron founder, Justin Sun, on charges of market manipulation and offering unregistered securities. Others who have been caught in the SEC’s crosshairs include crypto exchange Kraken and BUSD stablecoin issuer, Paxos. Meanwhile, Gensler affirms that every cryptocurrency token, apart from Bitcoin, is a security.
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