Gary Gensler, chair of the U.S. Securities and Exchange Commission, is urging for an increased annual budget of $2.4 billion to fund the agency’s continued crackdown down on cryptocurrency.
“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 class,” testified Gensler yesterday (March 29) before the Subcommittee on Financial Services and General Government.
Gesler’s request comes amid the SEC’s increasingly touchy approach to cryptocurrency in recent months. Since suing the now-bankrupt crypto exchange FTX for fraud alongside its founder Sam Bankman-Fried in December, the agency has targeted cryptocurrency companies such as Genesis Global Capital and Gemini Trust, Kraken, and Do Hyeong Kwon’s Terra and Luna stablecoins.
In March alone, the SEC reportedly notified crypto exchange Coinbase of possible securities law violations, charged Justin Sun for his sale of Tronix and BitTorrent tokens, and sued crypto trading platform Beaxy over failing to register as a securities exchange and allegedly misappropriating customer money.
The SEC’s proposed 2024 budget would be around a $200 million increase from 2023. The agency is requesting funding for 170 new positions, in addition to funding for staff hired the year prior, testified Gensler.
A significant portion of these jobs would entail adding to the SEC’s enforcement and examinations divisions, which account for around half of the agency’s staff, he said. In 2022, the enforcement division received more than 35,000 tips, complaints and referrals from whistleblowers and others, more than double the number received in 2016, despite the agency shrinking by five percent during the same time period, said Gensler.
“Meanwhile, rapid technological innovation in the financial markets has led to misconduct in emerging and new areas, not least in the crypto space,” he testified. “Addressing this requires new tools, expertise, and resources.”
The examinations division, responsible for defending those relying on investment advisors, has additionally had its resources “stretched thin,” said Gesler, with registered investment advisors growing by 22 percent from 2017.
Who is Gary Gensler?
Gensler, who was nominated by President Joe Biden to serve as SEC chair in February 2021, previously reiterated that the agency needs far more employees in order to crack down on crypto while testifying before Senate lawmakers in Sep. 2021.
Before joining the SEC, Gensler was a professor at MIT’s Sloan School of Management, where he taught classes on financial technology and blockchain. “The course begins with a review of Bitcoin and an understanding of the commercial, technical, and public policy fundamentals of blockchain technology, distributed ledgers, and smart contracts,” read the class description for “Blockchain and Money,” one of Gensler’s courses.
Between 2017 and 2019, he served as chair of the Maryland Financial Consumer Protection Commission, and was formerly chair of the U.S. Commodity Futures Trading Commission under former President Barack Obama.
Gensler, who earned an undergraduate degree and MBA from the University of Pennsylvania’s Wharton School, worked as an investment banker at Goldman Sachs for 18 years before entering public service.
He succeeded Jay Clayton as SEC chair, who held the position between 2017 and 2020 and additionally focused on tackling cryptocurrency. Just before Clayton stepped down, the agency filed a lawsuit against Ripple Labs, a startup associated with XRP cryptocurrency, charging the company with selling unregistered securities.
Clayton has since become involved in the cryptocurrency industry himself, taking advisor positions at Fireblocks, a crypto platform, and Electric Capital, a crypto venture capital firm.