SEC Gears Up For Increased Scrutiny On Crypto Entities

During his address at the Securities Enforcement Forum Central 2023, David Hirsch, the head of the SEC’s Crypto Asset and Cyber Unit, raised concerns about the rising number of cryptocurrency exchanges and DeFi platforms potentially bypassing regulations.

"Rigorous Oversight"

Hirsch's words indicated a commitment to reinforced scrutiny, with the SEC keeping a watchful eye on certain DeFi players and considering imminent legal action on various entities. He stressed the regulator's reach wasn't confined to just prominent crypto exchanges but extended to brokers, dealers, clearinghouses, and others in the domain. He reiterated that the SEC would be rigorous in its oversight, especially towards organizations that remain unregistered or are non-transparent in their operations.

"We’re going to continue to conduct investigations, we’re gonna be active in the space," stated Hirsch.

The SEC's assumed jurisdiction over the crypto domain has been highly controversial. The agency's chairman, Gary Gensler, regularly finds himself justifying the SEC's stance to governmental bodies.

An Agency In Trouble

Yet, Hirsch acknowledged the agency’s bandwidth is stretched, given the ongoing legal battles with crypto behemoths like Ripple, Coinbase, and Binance. He hinted at the challenges faced by the SEC due to its budgetary constraints. With large entities often employing high-profile legal teams, judicial proceedings can be lengthy, making the regulator's task arduous.

Previously, crypto entities, when faced with SEC charges, generally opted for settlements. But a changing tide has seen an increasing number standing their ground, viewing the SEC as a less formidable opponent.

A. Kristina Littman, who chaired the conference and is also Hirsch’s predecessor, summed up the SEC's current state by saying it's "at capacity." Hirsch agreed but remained steadfast in his resolve, even as he conceded the regulator doesn't always hit its mark.

Meanwhile, amidst the SEC's heightened activity and criticisms, the Commodity Futures Trading Commission (CFTC) is crafting its regulations for the crypto sector, aiming to establish itself as the primary oversight body.

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