- The SEC chair told Senators on Tuesday that the SEC has shrunk over the years while markets have grown in size and complexity.
- He spoke during a hearing on oversight of the agency, which has riled the crypto industry and Wall Street.
Securities and Exchange Commission Chair Gary Gensler told the Senate Banking Committee on Tuesday that his agency is too understaffed to adequately police the crypto markets.
“I’ve been around finance for 44 years now and I’ve never seen a field that’s so rife with misconduct. It’s just … it’s daunting,” Gensler said.
Gensler was fielding questions from Senators during a hearing on SEC oversight.
Gensler said in his prepared testimony ahead of the hearing that his staff do “extraordinary work with limited resources”, noting that his agency’s headcount shrank from 2016 to 2022.
However, he said, it is now expected to grow to 3% larger than it was in 2016 thanks to more funding.
Still, markets in general — including crypto — have grown by 50% to 70% in terms of activity and complexity in that time, Gensler told Senators.
Gensler has said before that his agency is insufficiently funded to cope with what he believes is the inherently non-compliant business models of many crypto firms in the US. Under his rule, the SEC has levied a slew of enforcement actions against some of the largest and most important crypto exchanges such as Binance and Coinbase.
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In July, Gensler said he supported the Biden administration’s fiscal year 2024 request for $2.4 billion for SEC operations, but requested $109 million more for the agency’s enforcement team.
Congress funded 5,303 positions at the SEC in 2023, a headcount increase of 400. The requested increase for 2024 would fund another 170 positions, he said.
Broad regulatory agenda
Gensler’s uncompromising stance on crypto has drawn huge criticism from rulemakers and the industry. But while his enforcement actions have dominated oversight hearings in the House Financial Services Committee, Tuesday’s meeting focused more on the agency’s broader regulatory agenda.
Republican Senators rebuked the SEC chair, saying these rules would undermine innovation and the US capital markets.
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Gensler has been tough on crypto, but he’s hardly let Wall Street off the hook, initiating what opponents call an aggressive rulemaking agenda in a host of markets and industries, including stocks, bonds, private equity, and fund management. Recent proposals have addressed artificial intelligence and cybersecurity.
Gensler’s kinetic tenure as SEC chair echoes his approach when he was commissioner of the CFTC, ramming home post-financial crisis rules under a Democratic administration.
Gensler could expect a relatively friendly welcome in this Democrat-led committee when it comes to crypto. The Senate Banking Committee boasts a number of the industry’s staunchest opponents, including Elizabeth Warren.
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He will get a much shorter shrift in the Republican-led House Financial Services Committee, where he is expected to testify on September 27.
