SEC Requests $158 Million Increase to Tackle Crypto Market Challenges in 2025 Budget Proposal

The U.S. Securities and Exchange Commission (SEC) is seeking an additional $158 million for its 2025 budget to address the growing complexities in financial markets, particularly the challenges stemming from the crypto sector. 

U.S. Securities and Exchange Commission Requests Increased Budget

According to the SEC’s March 11 Congressional Budget Justification, the agency is requesting a total budget of $2.594 billion for the 2025 fiscal year, up from $2.436 billion requested in 2024. 

The SEC’s 2025 Budget Justification is out. The President’s request is for $2.594 BILLION in funding. Over $100 million increase from 2024. It will come as no shock that the 2025 priorities include Private Funds, AI and “the wild west of the crypto markets”.…

— Anne Kelley (@amk_dc) March 18, 2024

In the 148-page document, U.S. Securities and Exchange Commission Chair Gary Gensler emphasized that rapid technological advancements are reshaping markets and business models, citing the emergence of new communication channels such as Reddit forums and celebrity influencers.

He also highlighted the challenges posed by the crypto markets, describing them as a “Wild West” characterized by noncompliance and speculative behavior.

Gensler underscored the need for increased resources to combat potential wrongdoing, stating that the U.S. Securities and Exchange Commission must be equipped to address bad actors effectively.

Part of the additional funding would be allocated to expanding staff across the agency’s divisions, with a target of 5,621 positions in 2025 compared to 5,473 in 2024.

This expansion includes recruiting staff with a focus on strengthening oversight in areas such as cryptocurrencies and up-and-coming financial technologies.

Specifically, the Division of Examinations seeks 23 additional staff to address the unique risks of crypto markets. Alongside this, the Office of Investor Education and Advocacy (OIEA) looks to add a position specializing in fraud related to crypto securities.

This expansion is mirrored in the Office of the General Counsel (OGC), where two additional positions are needed – one for increased litigation against the Commission and another to bolster its whistleblower program, which has seen a surge of activity.

SEC Reports Increase in Crypto-Related Enforcement Actions

According to Gensler, the regulator “received more than 35,000 separate tips, complaints, and referrals from whistleblowers and others in FY 2022,” which helped it bring more than 750 enforcement actions and “resulted in orders for $6.4 billion in penalties and disgorgement.”

Thirty of these actions were related to the crypto industry, resulting in $242 million in monetary penalties. This represents a 36% increase over the 22 actions announced in 2021.

Despite falling short on some performance targets, the U.S. Securities and Exchange Commission reported an increase in crypto-related enforcement actions, highlighting the agency’s ongoing efforts to protect investors and maintain market integrity.

Gensler’s strategic goals for the agency, outlined in 2022, include protecting the public against fraud, establishing a robust legal framework, and promoting workforce diversity.

In 2023, the U.S. Securities and Exchange Commission initiated 46 crypto-related enforcement actions, more than double the number in 2021, although they accounted for less than 6% of its total 784 actions that year.

In its performance report for 2023, the U.S. Securities and Exchange Commission claimed to have met or exceeded 28 out of 36 performance targets, falling short on six and lacking sufficient data for two.

These targets encompass various aspects, such as the number of examinations conducted and the success rate of litigation. Despite its overall performance, the SEC noted that it did not meet the target for the percentage of lawsuits won on at least one claim in 2023.

Cornerstone reported that roughly half of the 108 litigation cases brought since 2013 were resolved by the courts. Cases against major exchanges, including Binance, Coinbase, Terraform Labs, Ripple, and Kraken, remained active as of writing.