The U.S. Securities and Exchange Commission (SEC) is struggling to recruit and retain crypto experts due to internal hiring restrictions, according to a new report from the agency’s Inspector General.
The statement comes at a time when the SEC is highly focused on reigning in the blockchain industry, which its chairman Gary Gensler has described as “largely non-compliant.”
Experts Won’t Sell Their Crypto
Per the Inspector General’s Statement on the SEC’s Management and Performance Challenges on Thursday, the SEC “faces challenges in recruiting specialists in crypto assets” for investigation and enforcement purposes.
The SEC has launched over 50 enforcement actions against crypto industry firms this year, including global crypto exchange giants like Coinbase and Binance.
Its disputes usually surround companies listing or issuing so-called “crypto asset securities” without proper registration. This often leads to drawn-out lawsuits dissecting the letter of the law about whether a given crypto qualifies as an investment contract.
SEC officials cite a dearth of qualified experts and high-level competition from the private sector as reasons for its recruitment troubles. What’s more, those who understand crypto best are often investors themselves – a no-no for prospective SEC employees.
“The Office of the Ethics Counsel has determined [holding crypto assets] would prohibit them from working on particular matters affecting or involving crypto assets,” the report stated. “This prohibition, according to SEC officials, has been detrimental to recruiting, as candidates are often unwilling to divest their crypto assets to
work for the SEC.”
The report highlighted crypto and artificial intelligence as industries around which the SEC “must continuously adapt and build new expertise and capabilities.” It also noted that no market regulator yet has “comprehensive authority” to regulate spot markets for cryptos that aren’t securities, such as Bitcoin (BTC).
Owning Versus Understanding Bitcoin
In May 2022, a global survey conducted by Block and Wakefield Research found that over half of non-Bitcoin owners didn’t invest in crypto primarily because they didn’t understand it well enough. Furthermore, perceived self-knowledge of Bitcoin was the greatest predictor of willingness to buy BTC at the time.
Bitcoin, the largest cryptocurrency by market cap, has appreciated by over 100% this year.
In U.S. Congress, some of the most vocal crypto proponents are themselves Bitcoin owners, including senators Cynthia Lummis and Ted Cruz. Presidential candidate Robert F. Kennedy is also a Bitcoin owner.