The House Committee on Financial Services will be holding a virtual hearing tomorrow entitled “Oversight of the U.S. Securities and Exchange Commission: Wall Street’s Cop Is Finally Back on the Beat.” SEC Chairman Gary Gensler will traipse back to the Capitol to update the Committee on the priorities of the SEC.
Gensler will also be forwarding his budget request for fiscal year 2023 that includes an increase of 8.8% versus the fiscal year 2022. The funding increase is said to be needed to hire additional agency personnel to oversee “increasingly complex and growing financial markets that are expanding across borders and asset classes, including digital assets.”
The Hearing memorandum adds that recent innovations in Fintech and markets have fostered a new class of digital assets, many of which have the characteristics of securities, and introduce new forms of trading. The SEC has revealed 54 enforcement actions since June 2019 against digital asset offerings, including ICOs, that raised around $8.2 billion.
Digital asset marketplaces operate similar to exchanges yet are not subject to similar compliance demands. Gensler has publicly stated he would like to see greater regulation of these trading platforms.
Expect the testimony to tackle DeFi (decentralized finance) where individuals can trade without an intermediary in a peer-to-peer exchange, as well as stablecoins, that have “drawn financial stability concerns” due to their size and lack of transparency. Gensler believes they may fall under the SEC’s jurisdiction as security-based swaps.
There is plenty more on the list including SPACs, gamification, payment for order flow, and more.
The hearing is scheduled to commence at 12 Noon ET, October 5, 2021. The hearing will be live-streamed on the Committee’s website.