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SEC Gensler Seeks Extra Funding to Fight Crypto After XRP Loss

Published July 20, 2023 11:29 AM
Teuta Franjkovic
Published July 20, 2023 11:29 AM
Key Takeaways
  • A larger budget for Gensler’s office to combat crypto “misconduct” was requested in his latest broadside against the crypto
  • If approved by Congress, it would increase the SEC’s enforcement budget to $1.4 billion
  • In 2022, the SEC brought more than 750 enforcement actions throughout the markets it oversees

At a hearing of the U.S. Senate Committee on Appropriations on Wednesday, Securities and Exchange Commission (SEC) Chairman Gary Gensler argued for tens of millions of dollars in additional funding for his organization’s multibillion-dollar budget, telling lawmakers the SEC must grow to, among other things, protect investors from a crypto industry “rife with noncompliance.”

“Wild West” of Cryptocurrency Markets

“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,” Gensler stated  in his prepared remarks.

Gensler commented, “With funding to meet the scale of our mission, we can be an even stronger advocate for the American public—investors and issuers alike.”

According to Gensler , the SEC is requesting funding of an additional $72 million to hire dozens of new full-time employees to its team. The SEC has already launched extensive measures to combat crypto crimes. The chairman said that the $2.364 billion the committee approved last week to fund the SEC for fiscal year 2024 is adequate to “support currently authorized staffing levels given inflation.”

Can the SEC Become ‘Great Champion for the US Public’?

According to statistics Gensler provided in his remarks, the SEC employed 4,685 individuals in 2023, with about half of them being responsible for enforcement and examination tasks. In addition to providing full-year funding for employees recruited in 2023, the additional funds would assist the agency in adding 170 positions to its teams, potentially raising the SEC’s overall full-time equivalent to 5,139 workers.

Gensler added, “We can be an even stronger champion for the American public—investors and issuers alike—with funding to fulfill the scope of our mandate. “Removing fraud, manipulation, and abuse reduces system risk.”

When was the SEC there?

The hearing’s questioning from lawmakers revealed a variety of viewpoints on cryptocurrencies and the SEC’s approach to regulating them. Gensler was questioned by Sen. John Kennedy (R-La.) on why the SEC did not stop the alleged fraud at the defunct cryptocurrency exchange FTX in its tracks.

Here’s [former FTX CEO Sam Bankman-Fried], who accomplished everything except purchase Mount Rushmore, and you weren’t interested in where this man is getting his money? Kennedy enquired. The SEC was absent. (Gensler pointed out that the Bahamas was home to FTX’s headquarters and that launching enforcement actions requires time.)

Sen. Richard Durbin (D-IL) expressed skepticism about cryptocurrencies in general and questioned Gensler on the SEC’s resources for overseeing the sector.

Sen. Bill Hagerty (R-TN), on the other hand, cited statistics that CoinDesk readers might be familiar with but that the general public may not, such as the stablecoin market share and the number of blockchain developers in the U.S., to highlight his worry that the SEC’s “regulation by enforcement” and murky rules are pushing business and innovation overseas.

Moving Market Momentum

With a 2.4% increase for the day, the crypto markets have ignored Uncle Sam’s repeated warnings and actions. All losses from the CFTC v. Binance case from earlier this week have been eliminated by this.

As a result, the total market capitalization was $1.22 trillion at the time of writing.

During the Thursday morning Asian trading session, Bitcoin  momentarily reached $29,000; but, as of the time of this writing, it has dropped back to $28,558. According to CoinMarketCap, Ethereum  was trading a little under $1,800 at the time.

Worried That Chatbots Could Lead to a Market Crisis

Recently, Gensler broke his silence over the recent Ripple court decision on July 17 during a lecture before the National Press Club, outlining various potential use cases for AI that may assist the regulator in its role as a securities watchdog.

“We at the SEC could also benefit,” he continued, “from staff using more artificial intelligence in their market surveillance, disclosure review, exams, enforcement, and economic analysis.”

The SEC took enforcement actions against at least 54 Bitcoin businesses between 2018 and the first part of 2023. After FTX fell in November, these behaviors became much more common.

 

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