Gary Gensler Outlines Plans to Enhance SEC’s Oversight of Cryptocurrencies

Gary Gensler, the Chairman of the U.S. Securities and Exchange Commission (SEC), recently testified before the House Appropriations Subcommittee on Financial Service and General Government about the SEC’s budget request for Fiscal Year (FY) 2024. Gensler expressed his support for the President’s request of $2.436 billion for the SEC, which would provide funding for an additional 170 positions, as well as full-year funding for staff hired in FY 2023.

During the hearing, Gensler also spoke about the need for the SEC to improve its regulation of crypto assets. He highlighted the risks that investors face in a “Wild West” crypto market rife with noncompliance and emphasized the need for new tools, expertise, and resources to combat misconduct in this emerging asset class.

Gensler noted that the SEC’s Enforcement Division received more than 35,000 tips, complaints, and referrals in FY 2022, and despite limited resources, brought more than 750 enforcement actions – a 9% increase over the prior year – that resulted in orders for $6.4 billion in penalties and disgorgement.

To address the challenges of emerging and new areas in the financial markets, including the crypto space, Gensler believes that the SEC needs additional resources to investigate misconduct on a larger scale and accelerate the pace of enforcement investigations to resolution. He stressed that the new staff will provide the Enforcement Division with more capacity to meet these challenges.

In recent weeks, the SEC has been taking a more active role in the regulation of the crypto space. The regulator sent a “Wells notice” to Coinbase about potential securities law violations, charged Tron founder Justin Sun for market manipulation and offering unregistered securities, and took action against crypto exchange Kraken and stablecoin BUSD issuer Paxos. Gensler has also maintained that all crypto tokens other than bitcoin are securities.