Gary Gensler, chair of the United States Securities and Exchange Commission, or SEC, has cited concerns about cryptocurrency enforcement in its budget request for the next fiscal year.
In written testimony for a Wednesday hearing of the U.S. House Committee on Appropriations, Gensler said he supported President Joe Bidenโs request to budget more than $2.1 billion for the SEC in FY2023, allowing the regulatory body to increase its enforcement division by 50 people. The SEC chair cited concerns about the crypto space, referring to markets as โhighly volatile and speculativeโ as well as the need for โnew tools and expertiseโ to address enforcement.
โThe additional staff will provide the Division with more capacity to investigate misconduct and accelerate enforcement actions,โ said Gensler. โIt also will strengthen our litigation support, bolster the capabilities of the Crypto Assets and Cyber Unit, and investigate the tens of thousands of tips, complaints, and referrals we receive from the public.โ
Addressing Michigan Representative Brenda Lawrence at the hearing, Gensler reiterated his view that โmostโ offerings from token projects fell under the SECโs regulatory purview as securities and should be registered accordingly. According to the SEC chair, investors were currently โnot well protectedโ given the regulatory bodyโs limitations on enforcement:ย
โWeโll use our enforcement tools to bring enforcement actions [against crypto trading platforms], but I prefer if they come in […] Weโre not trying to grow really significantly, but resources to grow at least six percent to grow our enforcement arm in this space.โ
Gensler later added he wanted more funding to dedicate to issues related to the growing crypto space, citing 85-90 enforcement actions the SEC had brought against digital asset firms in the last year. He also referred to the recent price volatility of a crypto asset โthat went from $50 billion of value to near zero just in the last three weeks,โ possibly referring to TerraUSD (UST).
Related: SEC doubles down on crypto regulation by expanding unit
The recent volatility among major cryptocurrencies including Bitcoin (BTC) and Ether (ETH) following the collapse of Terra (LUNA) has caught the attention of more than a few regulators and lawmakers in the United States. On May 12, Treasury Secretary Janet Yellen addressed theย House Financial Services Committee, including in her testimony that TerraUSD (UST) and Tether (USDT) depegging from the U.S. dollar was not a โreal threat to financial stabilityโ given the scale of the stablecoin market.
