Securities and Exchange Commission (SEC) Chairman Gary Gensler made a pitch for tens of millions of dollars in additional funding for his agency’s multi-billion budget at the U.S. Senate Committee on Appropriations on Wednesday, telling lawmakers the agency must expand to, among other things, protect investors against a crypto industry “rife with noncompliance.”
“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 said in his prepared remarks.
“With funding to meet the scale of our mission, we can be an even stronger advocate for the American public—investors and issuers alike,” he said.
The SEC, which has undertaken wide-ranging efforts to crack down on crypto crimes, is seeking an additional $72 million to add dozens of additional full-time staff members to its roster, Gensler said. A bipartisan bill the committee approved last week to bankroll the SEC $2.364 billion for fiscal year 2024 is just enough to “support currently authorized staffing levels given inflation,” the chairman argued.
The SEC employed 4,685 people in 2023, with roughly half focusing on enforcement and examinations duties, according to data Gensler shared in his remarks. The additional funding would help the agency add 170 positions to its teams, in addition to providing full-year funding for staff members hired in 2023, potentially bringing the SEC’s total full-time equivalent to 5,139 employees.
“With funding to meet the scale of our mission, we can be an even stronger advocate for the American public—investors and issuers alike,” Gensler said. “Stamping out fraud, manipulation, and abuse lowers risk in the system.”
'Where was the SEC?'
Lawmakers' questions during the hearing signaled a range of attitudes toward crypto and toward the SEC's approach to regulating it.
Sen. John Kennedy (R-La.) grilled Gensler on why the SEC did not nip the alleged fraud at failed crypto exchange FTX in the bud.
"Here's [former FTX CEO Sam Bankman-Fried] who did everything but buy Mount Rushmore and you weren't curious where this guy’s getting this money?” Kennedy asked. “Where was the SEC?” (Gensler noted FTX was headquartered in the Bahamas and that bringing enforcement actions takes time.)
Sen. Richard Durbin (D-IL) sounded suspicious of crypto generally and asked Gensler if the SEC had enough funds to police the industry.
On the other end of the spectrum, Sen. Bill Hagerty (R-TN) rattled off metrics that may be familiar to CoinDesk readers but not the general public – stablecoin market share, the number of blockchain developers in the U.S. – to underscore his concern that the SEC's "regulation by enforcement" and unclear rules are driving business and innovation offshore.
UPDATE (July 19, 21:35 UTC): Adds section detailing lawmakers' questions.
CoinDesk is an award-winning media outlet that covers the cryptocurrency industry. Its journalists abide by a strict set of editorial policies. In November 2023, CoinDesk was acquired by the Bullish group, owner of Bullish, a regulated, digital assets exchange. The Bullish group is majority-owned by Block.one; both companies have interests in a variety of blockchain and digital asset businesses and significant holdings of digital assets, including bitcoin. CoinDesk operates as an independent subsidiary with an editorial committee to protect journalistic independence. CoinDesk offers all employees above a certain salary threshold, including journalists, stock options in the Bullish group as part of their compensation.