SEC Joins Crypto Regulatory Staff

Gary Gensler

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The Securities and Exchange Commission announced Tuesday that it will nearly double its staff responsible for protecting investors in crypto markets.

The regulator’s Crypto and Cyber ​​team, a unit of the SEC’s broader Enforcement division, will increase its headcount by 20 for a total of 50 dedicated positions.

Wall Street’s top law enforcement officer said the 20 additions will include investigative attorneys, trial attorneys and fraud analysts. Both SEC Chairman Gary Gensler and Chief Compliance Officer Gurbir Grewal hailed the hires as overdue and key to regulating one of Wall Street’s newest and hottest industries.

The SEC’s cryptocurrency unit “has successfully brought dozens of cases against those seeking to take advantage of investors in the crypto markets,” Gensler said in a statement. “By nearly doubling the size of this key unit, the SEC will be better equipped to police irregularities in the crypto markets while continuing to identify disclosure and enforcement issues regarding cybersecurity.”

Grewal added that individual retail investors tend to make up the bulk of victims of crypto-related securities fraud. Cyber ​​threats continue to pose “existential” risks to the US financial system, she added.

“The beefed-up crypto and cyber asset unit will be at the forefront of protecting investors and ensuring fair and orderly markets in the face of these critical challenges,” Grewal said in a statement.

The announcement comes nearly eight months after Gensler complained to lawmakers that his agency needed more staff to handle the volume of new and complex financial technologies.

Gensler told Sen. Catherine Cortez Masto, D-Nev., in September that the regulator could use “a lot more people” to assess and regulate some 6,000 new digital projects.

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“Currently, we just don’t have enough protection for investors in crypto finance, issuance, trading, or lending,” Gensler told the Senate Banking Committee at the time. “Frankly, right now, it’s more like the Wild West or the old ‘buyer beware’ world that existed before the securities laws were enacted.”

SEC representatives did not respond to an email seeking comment on whether the additional 20 hires would fully meet the need for more staff.

Since being confirmed by the Senate to lead the SEC in April 2021, Gensler has embarked on one of the most ambitious regulatory agendas in decades.

He has pushed for potential rule changes for brokers selling client orders, more extensive climate disclosures by corporations, and much tighter oversight of the fast-growing cryptocurrency market.

While President Joe Biden and other Democrats have praised Gensler’s determined approach, Republicans have criticized his efforts as partisan and restrictive of innovation.

“As for the people and companies you regulate, do you consider yourself their dad?” Senator John Kennedy, R-Los Angeles, asked Gensler in September. “Why does he impose his personal preferences on cultural issues and social issues on companies, and therefore on their customers and their workers?”

Gensler has said investors themselves want more clarity from companies about the risks they face from climate change and bad actors looking to steal digital assets.

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