With the rapid changes in technology especially in financial technology such as crypto, there have increased risks for the investors too. To protect investors from financial frauds, enforcement agencies must also be equipped with sufficient staff, funds and latest tools and technologies. This was stated by United States Security and Exchange Commission Chair, Mr. Gary Gensler while giving testimony before Subcommittee on Financial Services and General Government of the U.S. House Appropriations Committee.
He pointed out, “highly volatile and speculative crypto marketplace has mushroomed, attracting tens of millions of American investors and traders.”
From the testimony, it also clearly visible that the recent collapse of Terra Luna Stable coin was also weighing on Mr. Gensler’s mind. He said, “……misconduct in emerging and new areas, from complex securities products to new financial technologies to crypto, requires new tools and expertise.”
Moreover, there have been reports of frequent hacking in the crypto exchanges resulting into crypto assets worth millions of dollars being stolen by hackers. Mr. Gensler said, “Growing cybersecurity risks have implications for the financial sector, investors, issuers, and the economy at large.”
He stressed the need to upgrade manpower resources, technology and financial resources for enforcement agencies to meet the growing challenges in financial regulation sector. According to him “new financial technologies and business models continue to change the face of finance for investors and issuers.”
In his testimony, Mr. Gensler has supported the 8% increase over the last year in Budget request for SEC operations. This will not only maintain the current services but also provide resources for technology upgradation for enforcement agencies.
High speculation and volatility in crypto markets has rattled the governments across the world. Moreover, these crypto currencies have been reported to be used in illegal activities such as drug trafficking, money laundering and terror funding.
Many people who have invested in crypto currencies have suffered huge losses due to sudden fall in prices of crypto currencies such as Bitcoin, Terra Luna etc. Extreme volatility in crypto’s value is the main reason for SEC to look into operations of the Crypto transactions. More budget will enable the SEC to employ more capable staff to investigate and prosecute the wrong doers for cheating the innocent and unaware investors.
The SEC Chair said, “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.”
