According to a press release, the Securities and Exchange Commission (SEC) is set to add twenty additional positions to an enforcement unit tasked with policing cryptocurrency markets, a near doubling of the size of the unit.
“The Division of Enforcement’s Crypto Assets and Cyber Unit has successfully brought dozens of cases against those seeking to take advantage of investors in crypto markets,” said SEC Chair Gary Gensler. “By nearly doubling the size of this key unit, the SEC will be better equipped to police wrongdoing in the crypto markets while continuing to identify disclosure and controls issues with respect to cybersecurity.”
The unit is focused on securities law violations related to crypto asset offerings, exchanges, lending and staking products, decentralized finance (DeFi) platforms, non-fungible tokens (NFTs), and stablecoins, according to the release.
“Crypto may offer new ways for entrepreneurs to raise capital and for investors to trade, but we still need investor and market protection,” Chairman Gensler noted in remarks in April, comparing crypto platforms to alternative trading systems. Gensler has referred to crypto as a “highly speculative” asset class and has called for greater regulation of the space. He argues cryptocurrencies are securities and thus fall under the SEC’s authority.
Some crypto enthusiasts regard Chairman Gensler as an antagonist. Paul Jossey, a fellow at the libertarian Competitive Enterprise Institute, wrote earlier this year that Gensler has “declared a permanent crypto war.”
In March, President Biden issued an executive order on cryptocurrency, directing federal agencies to develop policy recommendations. It “encourages regulators to ensure sufficient oversight and safeguard against any systemic financial risks posed by digital assets.”
Meanwhile, absent federal regulations a growing number of states are issuing their own rules, some written almost entirely by industry lobbyists, according to the New York Times. More than 150 pieces of legislation related to cryptocurrency are pending in 40 states and Puerto Rico, according to the report.
Justin Hendrix is CEO and Editor of Tech Policy Press, a new nonprofit media venture concerned with the intersection of technology and democracy. Previously, he was Executive Director of NYC Media Lab. He spent over a decade at The Economist in roles including Vice President, Business Development & Innovation. He is an associate research scientist and adjunct professor at NYU Tandon School of Engineering. Opinions expressed here are his own.