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Gary Gensler, president of the United States Securities and Exchange Commission, or SEC, has raised concerns about the implementation of cryptocurrency in his budget request for the coming fiscal year.
In written testimony for a Wednesday hearing of the U.S. House Committee on Appropriations, Gensler said he supported President Joe Biden’s 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 President of the SEC raised concerns about crypto space, referring to markets as "highly volatile and speculative" as well as the need for "new tools and expertise" to deal with law enforcement.
“The additional staff will allow the Division to better investigate misconduct and accelerate enforcement efforts," said Mr. Gensler. This will also enhance our litigation support, strengthen the capacity of the crypto assets and cyber unit, and investigate tens of thousands of pieces of advice, complaints, and the referrals we get from the public."
Addressing Michigan Representative Brenda Lawrence at the hearing, Gensler reiterated his view that “most” offerings from token projects fell under the SEC’s regulatory purview as securities and should be registered accordingly. According to the SEC President, investors were currently "not well protected" given the regulator's enforcement limitations:
"We will use our enforcement tools to take enforcement actions [against crypto trading platforms]. We’re not trying to grow really significantly, but resources to grow at least six percent to grow our enforcement arm in this space.”
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. We don't try to expand a lot.
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 the House Financial Services Committee, including in her testimony that TerraUSD (UST) and Tether (USDT) depegging from the U.S. dollar was not a “real threat to financial stability” given the scale of the stablecoin market.
