SEC seeks increased budget to regulate volatile crypto markets.
SEC Chair Urges Increased Funding to Keep Up with Market Challenges
The Securities and Exchange Commissioner (SEC) Chair, Gary Gensler, has expressed his support for the White House’s budget boost request for the stock market watchdog. However, he warned that the funds allocated were significantly less than what the agency had originally requested for the upcoming fiscal year.
The Senate Appropriations Committee has approved $2.4 billion for the SEC, which is $194 million more than the previous fiscal year. However, it falls short of Mr. Gensler’s initial proposal by nearly $73 million. This shortfall, according to Mr. Gensler, would hinder the SEC’s ability to address the various market challenges it faces today.
Growing Markets Require Increased Resources
During a recent Senate Appropriations Committee hearing, Mr. Gensler emphasized the need for increased resources to meet the demands of a rapidly growing market. He explained that the SEC’s fiscal year 2024 request would allow the agency to expand its Examinations Division personnel to 1,144 full-time examiners. While the organization has grown by 3 percent since 2017, Mr. Gensler stressed that the financial markets have experienced exponential growth during this period.
Mr. Gensler highlighted the significant increase in the number of clients of registered investment advisers, which has surged close to 70 percent from 34 million to 57 million. Additionally, average daily trading in the equity markets has expanded from 30 million transactions to 77 million transactions. This growth and complexity in the markets also bring about more opportunities for wrongdoing, according to Mr. Gensler.
Addressing Concerns in the Crypto Markets
Mr. Gensler cited the “Wild West of the crypto markets” as an example of the challenges the SEC faces. He revealed the agency’s plans to implement new measures and assets to address misconduct within the cryptocurrency industry.
A Bitcoin mock-up on Jan. 12, 2022. (John Fredricks/The Epoch Times)
“Technology is also rapidly transforming our markets and business models, whether it’s electronic trading, the cloud, artificial intelligence, or predictive data analytics,” he said. “The Wild West of the crypto markets is rife with noncompliance, where investors have put hard-earned assets at risk in a highly speculative asset class.”
Mr. Gensler emphasized that with adequate funding, the SEC can be a stronger advocate for the American public, protecting both investors and issuers. He believes that the fiscal year 2024 budget request would provide the agency with the necessary resources to fulfill its mission.
Pushback From Lawmakers
During the hearing, Mr. Gensler faced some pushback from lawmakers, including Senator John Kennedy (R-La.), who questioned the SEC’s actions regarding the failed crypto exchange FTX and its former CEO, Sam Bankman-Fried.
Senator Kennedy pointed out that the SEC had the authority to regulate crypto before FTX caused havoc in the market. He suggested that the SEC could have investigated the situation earlier and prevented the incident from occurring.
Another lawmaker, Senator Richard Durbin (D-Ill.), expressed concerns about the SEC’s funding to monitor and regulate the crypto industry. Mr. Gensler assured him that seeking additional funding was part of the agency’s efforts to address these concerns.
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