(Kitco News) Securities and Exchange Commission (SEC) Chair Gary Gensler testified Wednesday, urging for a bigger budget to oversee the crypto space.
"I wish we had more to be able to dedicate to this," Gensler testified before the House Appropriations Subcommittee on Financial Services and General Government. "The highly volatile and speculative crypto marketplace has mushroomed, attracting tens of millions of American investors and traders."
In the last six years, the crypto space exploded with digital tokens multiplying by more than tenfold, Gensler stated.
Investors getting involved with crypto remain largely unprotected, he added, citing the latest collapse of the TerraUSD (UST) stablecoin.
"The volatility in the crypto markets in recent weeks highlights the risks to the investing public," the SEC chair said. "There was one crypto complex that went from $50 billion in value to zero just in the last three weeks."
Gensler referred to last week's crypto crash, which saw the TerraUSD (UST) stablecoin collapse and Bitcoin drop below the $30,000 level.
Breaking down the SEC's current resources, Gensler said that his 1,300-staff enforcement division has just over 50 people focused on crypto. And this is already after adding 20 new members to the team.
"The public is not protected," he said. "Misconduct in emerging and new areas, from complex securities products to new financial technologies to crypto, requires new tools and expertise. 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 in his testimony.
When speaking about commodity-type versus security-type digital tokens, Gensler pointed out that Bitcoin is one of the few tokens that are likely commodity tokens, which means they belong under the Commodity Futures Trading Commission's purview.
However, most crypto tokens are considered securities and fall under the SEC's scope. He added that crypto exchanges that handle these tokens "should register with us as a national exchange."
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Earlier this week, Gensler said the crypto space is highly speculative, and investors need to pay close attention to disclosures, token ownership, and much more when taking on risks.
"I'm going to use this opportunity to talk not just to the audience in the room but to the investing public," Gensler said during the 2022 FINRA annual conference Monday. "You, the investing public, can make your choice about what risks you take, but there are supposed to be full and fair disclosures, and people aren't supposed to lie to you," Gensler said.
