SEC Enhances Crypto and Cyber Oversight Functions

The Securities and Exchange Commission (SEC) has rebranded and almost doubled the size of its digital finance oversight unit.

The financial regulator this week announced the addition of 20 new staff to the newly renamed Crypto Assets and Cyber Unit within its enforcement division.

The unit was initially set up as the Cyber Unit in 2017, and has acted upon more than 80 instances of “fraudulent or unregistered crypto asset offerings and platforms”, the SEC said in a statement. The actions had brought about monetary relief of more than $2 billion.

The unit oversees investor protection and securities law related to areas such as crypto asset offerings and exchanges, decentralized finance, non-fungible tokens, and stablecoins.

The Office for the Comptroller of the Currency has repeatedly called for regulatory frameworks to govern stablecoins and protect investors.

“Crypto markets have exploded in recent years, with retail investors bearing the brunt of abuses in this space,” said Gurbir Grewal, director of the SEC’s Division of Enforcement. “Meanwhile, cyber-related threats continue to pose existential risks to our financial markets and participants.

“The bolstered Crypto Assets and Cyber Unit will be at the forefront of protecting investors and ensuring fair and orderly markets in the face of these critical challenges.”

SEC chair Gary Gensler added that is was “increasingly important to dedicate more resources to protecting” investors from harm in the digital finance space. The expanded unit would mean the SEC was “better equipped to police wrongdoing in the crypto markets while continuing to identify disclosure and controls issues with respect to cybersecurity”, he said.

A recent survey by software company Starkware found that more than half of Americans believed cryptocurrencies and other digital assets were the “future of finance”.

In a column for Banking Exchange last month, Norton Rose Fulbright’s Andrea D’Ambra and Susana Medeiros outlined how financial institutions were particularly concerned about the risk of litigation stemming from cybersecurity breaches.