SEC Chairman Uses Crypto Enforcement to Justify Fiscal Year 2023 Budget

Gary Gensler, chairman of the United States Securities and Exchange Commission, or SEC, has raised concerns about cryptocurrency enforcement in his budget proposal for next fiscal year.

In written testimony for a US House Appropriations Committee hearing on Wednesday, Gensler said he supports President Joe Biden’s motion to budget more than $2.1 billion for the SEC in fiscal 2023, requiring the regulator to reorganize its enforcement division 50 people can increase. The SEC chairman expressed concern about the crypto space, citing markets as “very volatile and speculative” and the need for “new tools and expertise” to address enforcement.

“The additional staff will give the department more capacity to investigate wrongdoing and expedite enforcement action,” Gensler said. “It will also strengthen our litigation support, strengthen the capabilities of the Crypto Assets and Cyber ​​Unit, and investigate the tens of thousands of tips, complaints and recommendations we receive from the public.”

Speaking with Michigan Representative Brenda Lawrence at the hearing, Gensler reiterated his view that “most” token project offerings fall within the regulatory purview of the SEC as securities and should be registered as such. According to the SEC chairman, given the regulator’s limitations on enforcement, investors are currently “not well protected”:

“We will use our enforcement tools to take enforcement action [against crypto trading platforms]but I prefer it when they come in […] We’re not trying to grow really significantly, but resources to grow at least 6 percent to expand our enforcement department in this area.”

Gensler later added he wanted more funding for issues related to the growing crypto space, citing 85-90 enforcement actions the SEC launched against digital asset firms last year. He also referenced the recent price volatility of a crypto asset “that has risen from a $50 billion value to near zero in the last three weeks alone,” possibly referring to TerraUSD (UST).

Related: The SEC is doubling down on crypto regulation by expanding the entity

The recent volatility of major cryptocurrencies including Bitcoin (BTC) and Ether (ETH) following the collapse of Terra (LUNA) has drawn 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)’s decoupling from the US dollar, given the size of the stablecoin, does not pose a “real threat to financial stability.” be market.