U.S. Securities and Exchange Commission (SEC) Chairman Gary Gensler continues to solicit more oversight of digital currency firms. In his testimony before Congress, Gensler cited the need to provide more protection for investors as a justification for the bump in the SEC’s budget for the fiscal year 2023.
Gensler told the House Appropriation Committee the digital currency industry is posing new challenges to the SEC with its rapid expansion. The industry has grown over ten-fold in less than five years, as have the risks it poses for consumer protection, he said.
His written remarks also reiterated this, noting that market volatility has emphasized the need for more consumer protection in recent weeks alone. The increase in the SEC’s budget will help it bolster its digital currency enforcement team to keep up with the industry’s growth.
“The additional staff will provide the Division with more capacity to investigate misconduct and accelerate enforcement actions. It also will strengthen our litigation support, bolster the capabilities of the Crypto Assets and Cyber Unit, and investigate the tens of thousands of tips, complaints, and referrals we receive from the public,” he said.
Gensler also maintained that he considers a lot of digital currencies to be securities that fall under the regulator’s oversight. He has sounded the same sentiment repeatedly, urging digital currency exchanges to come in and “register” with the SEC.
Earlier this month, the SEC created the Crypto Assets and Cyber Unit by renaming its Cyber Unit. The staff strength of the unit was also increased from 20 to 50 persons.
The SEC’s approach to the industry continues to receive criticism
The SEC has been recording success in its enforcement actions against digital currency firms. This year, it reached a $100 million settlement with digital currency lender BlockFi for failure to register its offerings.
The settlement also introduced conditions under which BlockFi will continue its services that are likely to apply to similar digital currency lenders. But it has not all been successful as the commission’s case with Ripple continues to drag on.
The industry has also decried the SEC’s approach to the industry in general. Digital currency proponents, including SEC Commissioner Hester Pierce, have described the approach as regulation by enforcement.
Per a recent Reuters report, Peirce rehashed this point while warning the industry that the commission may soon make regulations that will damage the stablecoin market.
Watch: SEC Commissioner Hester Peirce on Bitcoin Association’s Blockchain Policy Matters
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